Salem Village at Miami Heights

Valley Crown ribbon cutting

Ralston Courtyard

Program Description

As part of the Tax Reform Act of 1986, the United States Congress created the Low-Income Housing Tax Credit (LIHTC) (IRC Section 42) to promote development of affordable rental housing for low-income individuals and families. To date, it has been the most successful rental housing production program in Nebraska, creating thousands of residences with very affordable rents. The Low-Income Housing Tax Credit, rather than a direct subsidy, encourages investment of private capital in the development of rental housing by providing a credit to offset an investor's federal income tax liability. The amount of credit a developer or investor may claim is directly related to the amount of qualified development costs incurred and the number of low-income units developed that meet the applicable federal requirements for both tenant income and rents.

The Nebraska Investment Finance Authority (NIFA) is designated as Nebraska's housing credit allocation agency.  NIFA's mission includes providing a broad range of financial resources for the development of affordable housing.  NIFA also provides technical assistance for such activities.  Because NIFA is self-funding, no Nebraska tax dollars are used to accomplish this mission.

Quick Info

How Tax Credits Work

Federal Low Income Housing Tax Credits (LIHTC) is a dollar-for-dollar credit against the federal income tax liability of the owner (developer or investor) of a low-income housing development. LIHTCs that are allocated to a development are claimed in equal amounts for a 10-year period. The rental property generating the LIHTC must remain in compliance with the program guidelines and rent restriction requirements for a period of not less than 30 years from the first taxable year of the LIHTC credit period.

Eligible Developments

In order to be considered for tax credits in Nebraska, the proposed development must involve new construction, substantial rehabilitation, or acquisition and substantial rehabilitation. For a building to be substantially rehabilitated, the expenditures during any 24-month period must be at least the greater of: (a) 20 percent of the depreciable basis of the building determined as of the first day of the 24-month period; or (b) an average of $6,700 per low-income unit.

CROWN

CROWN (Credits to Own) is a lease-to-own housing program developed to bring home ownership within reach for very low-income households while assisting local governments in revitalizing their neighborhoods. The objectives of the program are to:

CRANE

The Collaborative Resource Allocation for Nebraska (CRANE) program is a strategic allocation process between NIFA and other collaborating resource providers to accomplish difficult projects.

Multifamily Tax Exempt Bond Developments

NIFA has the authority to issue revenue bonds or other debt instruments to finance projects that involve the acquisition, construction or rehabilitation of rental housing projects in Nebraska for low to moderate-income households. If the bonds meet federal tax law requirements, the interest on the bonds is exempt from federal income tax and Nebraska state income tax. The bonds are repaid from the proceeds received by NIFA from the private developer under a revenue agreement (such as a lease, loan agreement or installment sale contract.)

Applicants of developments to be financed under the Multifamily Financing program are required to participate in the 4% LIHTC program administered by NIFA. Therefore, a specified minimum percentage of units in the project must not only be set-aside for occupancy by low-income households, but the rents charged for those units must also be restricted.  All other units in the development must be rented to low and moderate-income households (incomes not in excess of 150% of area median income.)