Changing Landscape for the Low-Income Housing Tax Credit

Published by Michael Novogradac on Wednesday, May 2, 2012 - 12:00am

On April 20, HUD published a Federal Register notice designating new Qualified Census Tracts (QCTs) for the Low-Income Housing Tax Credit (LIHTC) program that will go into effect January 1, 2013. To encourage affordable housing production in hard-to-serve areas, affordable rental housing projects located in QCTs are eligible for up to 30 percent more LIHTC than they otherwise would be.  

Time to Adjust

The release of this data in April is atypical; HUD said it is making the designation of QCTs for 2013 earlier than it has in recent years to provide more time for the public to adjust to the revised list.

Novogradac & Company’s initial analysis of the QCTs reveals a significant amount of change:

Total 2012 QCTs10,164
2012 QCTs removed from the list for 20133,376
2012 QCTs that will remain QCTs in 20136,788
New QCTs added for 20136,862
Total 2013 QCTs13,650

This initial assessment indicates there will be a roughly 34% increase in the number of QCTs in 2013. Much of this surge may be attributed to economic factors such as the median household income decreases caused by the Great Recession. In addition, the 2010 Census created an updated set of census tracts that was greater in number than the last set. An FAQ document released by the CDFI Fund regarding new eligibility for the new markets tax credit program – also updated based on the new Census data – says, “For the 50 states and the District of Columbia, the 2010 Census had 73,057 total tracts compared with the 65,443 in the 2000 Census.”  

Based on these figures, in 2012, 15.5% of all census tracts were QCTs; in 2013, 18.6% percent of census tracts will be QCTs.

Effective Date and Transition Rules

These changes will be extremely significant to LIHTC developers in the months and years to come. An upcoming article in the June 2012 issue of the Novogradac Journal of Tax Creditswill discuss the effective date of the 2013 QCTs and the transition rules that will apply. In the meantime, questions can be directed to Jim Kroger, CPA, at (415) 356-8000 or [email protected].

Additional Resources

Although HUD does not administer the low-income housing tax credit program, the Office of Policy Development and Research compiles and tracks information about LIHTC projects and their impact on the nation’s rental housing supply. More information about QCTs is available from HUD’s Office of Policy Development and Research: