A ten-year credit stream for rent-restricted housing — permanently expanded in 2026, and the other half of every mill-to-housing conversion we close.
| Quick Facts | |
|---|---|
| Credit amount | ~9% or ~4% of qualified basis annually for 10 years (≈70% / 30% present value) |
| Allocated by | State housing finance agencies — SC Housing, NCHFA, Virginia Housing — under each state’s QAP |
| 2025 law changes | Permanent +12% to 9% state ceilings from 2026; 4% bond threshold lowered to 25% of aggregate basis |
| Requirements | Rent and income restrictions for at least 30 years; 15-year federal compliance period |
| Investors | Banks (CRA-motivated), insurance companies, corporations — via syndicated funds or direct investment |
| Stacks with | Federal and state historic credits on mill-to-housing conversions; state LIHTCs including the SC Housing Tax Credit and Virginia HOTC |
The 25% bond threshold is the sleeper change. Deals that could not pencil under the 50% test now qualify with half the bond debt, and combined with the 9% ceiling increase, more affordable deals will close in the next five years than in any comparable period. Every one of them needs credit pricing, projections, and an investor.
For rehabilitation developers the important interaction is with historic credits: a mill converted to affordable housing can carry both, but LIHTC basis adjustments change the historic credit math and the two have different compliance periods and different investor markets.
We build the LIHTC projections, model 9% versus 4% executions under the new thresholds, structure twinned historic and LIHTC deals, and place the credits. Our partner CPA firm handles the cost certifications and the audits the compliance period demands.
Model my affordable housing dealOfficial references: IRC §42; state Qualified Allocation Plans; OBBBA (P.L. 119-21, July 2025).
The 9% credit is competitively allocated by the state housing finance agency and covers roughly 70% of qualified costs in present value. The 4% credit is non-competitive and pairs with tax-exempt bond financing, covering roughly 30%. The 2025 tax law cut the bond-financing threshold for the 4% credit from 50% to 25% of aggregate basis.
Two permanent changes: a 12% increase to the 9% state credit ceilings beginning in 2026, and a reduction of the 4% bond-financing threshold from 50% to 25% of aggregate basis. Together they are expected to unlock more than a million additional units over a decade.
Yes, and it is the classic structure for mill-to-housing conversions. The interaction requires care: LIHTC basis adjustments change the historic credit calculation, the two credits have different compliance periods, and they usually go to different investors.
Fifteen years for federal compliance, with rent and income restrictions running at least 30 years under the extended use agreement.
The 2026 expansion changed what pencils. Send us the deal and we will price it.
