Low Income Tax Credit Housing for Seniors: What to Know

Low Income Tax Credit Housing is a program offering affordable housing options for seniors with limited income. These communities offer a range of services, including meal programs and transportation. Learn more here!
senior couple smiling beside their home

You’ve worked hard your whole life. Now it’s time to enjoy your retirement in a safe, comfortable, and affordable home. Luckily for you, people who are 62 years or older may be eligible for special housing options through the Low Income Housing Tax Credit program (LIHTC). This tax credit provides an incentive for developers to create qualifying places that offer affordable living for senior citizens.

Keep on reading to learn what it is and how you can benefit from it.

What is Low Income Tax Credit Housing?

Low income tax credit housing is a type of housing that is designated for low-income senior citizens and families. To qualify for this type of housing, you must meet certain income requirements. This type of housing is often easier to obtain than other types of housing, such as public housing or subsidized housing.

The Low Income Housing Tax Credit (LIHTC) is a dollar-for-dollar tax reduction against your federal income taxes. The LIHTC was created as an incentive to encourage developers and investors to create or preserve affordable rental housing for low- and moderate-income families.

The LIHTC allows developers and investors to receive a credit against their federal income taxes for 10 years. This tax credit is in addition to any other federal, state, or local subsidies or tax incentives available. The LIHTC is the nation's largest source of financing for the development and preservation of affordable rental housing.

For a development to qualify for the LIHTC, at least 40% of the units must be set aside for households that make less than 60% of the area median income. Additionally, the rent for these units must be less than 30% of 60% of the area median income.

How Can Low Income Tax Credit Housing Benefit Seniors?

While affordable housing options can often come with a negative connotation, Low Income Tax Credit (LIHTC) housing offers numerous benefits to those who qualify. In addition to rent that is typically lower than the market rate, LIHTC senior housing also offers a variety of amenities and services, such as after-school programs for children and on-site healthcare facilities. These developments also often provide access to transportation and job opportunities, leading to increased economic mobility for residents.

Since the passage of the Tax Reform Act of 1986, developers have used Low Income Housing Tax Credits to finance the construction or rehabilitation of more than 50 thousand projects and 3.44 million rental units nationwide. Virtually all types of rental housing are eligible for the credits, including apartments, single-family homes, townhouses, co-housing communities, and assisted living facilities.

The Low Income Housing Tax Credit is available to any developers or owners who plan to build or rehabilitate rental housing targeted to low-income households. The buildings must be used for residential purposes and remain affordable to low-income households for at least 30 years.

The application process for LIHTC housing for seniors can be competitive, but it's worth taking the time to research and apply. Not only could you save on monthly rent expenses, but you may also gain access to resources that could improve your overall quality of life. Don't hesitate to explore the possibility of LIHTC housing - it just might be the answer to your affordable housing needs!

How Does the LIHTC Work?

The Low-Income Housing Tax Credit (LIHTC) program was created in 1986 with the goal of providing affordable housing options for low-income individuals and families. The program enables developers to receive a tax credit for building and operating affordable housing units. Individual states are allocated a certain amount of tax credits each year, and developers compete for these credits by proposing projects that meet the criteria set forth by the state.

The allocated tax credits can then be sold to investors, providing funding for the development and operation of the project. This process helps ensure that low-income housing remains available and well-maintained over the long term.

While the LIHTC program has faced some criticism and challenges, it continues to play a crucial role in addressing affordable housing needs throughout the country.

How Can I Qualify for LIHTC?

In order to qualify for LIHTC, your household must have an income at or below 60 percent of the area median income (AMI). Your rent must also not exceed 30 percent of your household's income. For senior households, at least 20 percent of the units in the development must be occupied by seniors who are 62 years of age or older.

To be eligible for the tax credit, applicants must also meet certain income requirements. For senior citizens, these requirements are as follows:

  • Households must have incomes at or below 60% of the area median income
  • One or more members of the household must be age 62 or older
  • The dwelling must be rent-restricted
  • The dwelling must be newly constructed or rehabilitated
  • The property must be owner-occupied
  • The property cannot be located in a rural area
contented senior couple having coffee outside their home

On top of these requirements, there are also limits on the amount of rent that can be charged for units that receive the tax credit. These limits vary depending on the location of the property and the number of bedrooms in each unit.

For seniors, figuring this out can be a tricky process. Social Security benefits are not counted as taxable income, which means that many seniors automatically assume they do not qualify for LIHTC. However, this is not always the case. Other forms of untaxed income, such as pensions and annuities, may still count towards the qualifying income limit.

How to Apply for Low-Income Housing Tax Credit for Seniors

To determine if you qualify for LIHTC senior housing, you will need to calculate your income using IRS Form 8844. This form is available on the IRS website or from your local library. Once you have obtained the form, you will need to gather the following information:

  • Your social security number
  • The names of all household members
  • The amount of money each member earned in the past year
  • Any other forms of untaxed income, such as public assistance or veteran’s benefits
  • Any deductions you are claiming, such as those for blindness or disability

Once you have gathered all of this information, you will be ready to fill out Form 8844. You will first need to enter your social security number and the names of all household members. Next, you will need to enter the amount of money each member earned in the past year. If any members did not earn any money, you will need to enter “0” on the form.

After you have entered all earned incomes, you will need to enter any other forms of untaxed income. This includes but is not limited to public assistance, child support, alimony payments, and veteran’s benefits. Once you have entered all sources of untaxed income, you will need to enter any deductions you are claiming. This could include deductions for blindness or disability.

After you complete Form 8844, you will need to total all Sources of Income and Total Deductions claimed. The total Sources of Income will be subtracted from the Total Deductions claimed to give your Modified Adjusted Gross Income (MAGI). MAGI is used to determine if you qualify for low-income housing tax credits because it reflects your taxable household income after certain adjustments have been made.

If your MAGI falls below the limit set by your state agency, then you may qualify for LIHTC.

Once your application has been received, it will be reviewed by a case worker who will determine if you are eligible for the program. If you are found to be eligible, you will be placed on a waiting list.

The waiting list can be quite long depending on the area you live in and the number of people who are ahead of you on the list. However, once your name reaches the top of the list, you will be contacted by a housing agent who will help you find an available unit that meets your needs.

How the LIHTC Housing Program Can Benefit Senior Citizens

The Low Income Housing Tax Credit (LIHTC) provides many benefits for senior citizens looking for affordable housing options. From increased access to safe and secure environments, LIHTC can provide seniors with the support they need to age in place comfortably and affordably. In fact, it’s one way the government offers help to homeless seniors. Here are some benefits of tax credit housing seniors should consider.

Increased Access to Affordable Housing

The most obvious benefit of LIHTC is that it increases access to affordable housing. This is especially helpful for senior citizens who may have trouble finding housing that suits their needs and budget. With LIHTC, developers can build mixed-use communities that include both commercial and residential units. This allows seniors to live in an age-restricted community while still being close to amenities like grocery stores, pharmacies, and medical facilities.

More Options for Senior Living

As the baby boomer generation enters retirement, there is an increased demand for senior housing options. The LIHTC has helped to meet this demand by incentivizing the development of senior housing developments. These developments provide seniors with safe, clean, and affordable places to live. Additionally, many senior housing developments offer amenities such as community rooms, fitness centers, and on-site medical services.

Improved Quality of Life

The LIHTC has also helped to improve the quality of life for seniors by providing them with safe and clean housing options. In addition, many senior housing developments offer amenities and services that help to improve seniors’ quality of life. For example, some developments offer transportation services to help seniors get around town. Others offer on-site medical services or fitness centers. By providing seniors with these types of amenities and services, the LIHTC is helping to improve their overall quality of life.

Increased Social Interaction

Many seniors experience social isolation and loneliness as they age. This can lead to health problems such as depression and anxiety. Senior housing developments can help to combat social isolation by providing opportunities for social interaction. For example, many developments have community rooms where residents can gather to socialize.

Other developments offer transportation services that allow residents to participate in activities outside of the development. By increasing social interaction, the LIHTC is helping to improve seniors’ mental and emotional wellbeing.

An Investment in the Future

Finally, by investing in LIHTC housing communities, senior citizens can help ensure that future generations will have access to affordable housing as well. As the senior population continues to grow, there will be an increased demand for affordable housing options. By investing in LIHTC today, senior citizens can help meeting that demand tomorrow while also enjoying the benefits of living in an age-restricted community.

Assistance Club Summary

The LIHTC is a great way to make housing more affordable for low-income seniors. Make use of this groundbreaking program to find safe and affordable housing!

If you think you might be eligible, be sure to contact your state's housing finance agency to find out more about how to apply.

For more housing and care advice for seniors, make sure to check out our other guides on Senior Assistance Club!