LIHTC (Low Income Housing Tax Credits)

How LIHTC Works

The federal government allocates LIHTC to each state on a per-capita basis. State Housing Finance Agencies (in Florida: Florida Housing Finance Corporation, FHFC) award credits to qualifying multifamily developments through competitive (9% credits) and non-competitive (4% credits) processes. Developers receive credits over a 10-year compliance period equal to a percentage of their qualified basis. Developers typically sell (syndicate) credits to corporate tax-credit investors — generating equity that funds the project. In exchange, the project restricts a percentage of units to households earning below 50%, 60%, or other AMI thresholds for at least 30 years (15-year initial compliance + 15-year extended use).

9% vs. 4% Credits — The Core Distinction

• 9% credits: Approximate 9% annual credit rate. Generate ~70% of total project equity through syndication. Awarded through competitive FHFC QAP (Qualified Allocation Plan) process — limited supply, highly competitive. Used for ground-up new construction. Pair with HUD 221(d)(4) construction-to-perm or other debt
• 4% credits: Approximate 4% annual credit rate. Generate ~30% of total project equity. Non-competitive (no QAP scoring) but require pairing with tax-exempt private activity bonds (allocated separately by FHFC). Used for acquisition/rehab, preservation, and certain new construction. Pair with HUD 223(f) acquisition/refinance or other debt

Florida Housing Finance Corporation (FHFC)

FHFC administers Florida's LIHTC allocation. Annual allocation cycles include:

• QAP (Qualified Allocation Plan): Annual scoring document defining how 9% credits are awarded; FHFC adjusts QAP priorities annually to address state housing policy goals
• 9% competitive cycles: Highly competitive — typically 4-10x oversubscribed in major Florida metros
• 4% non-competitive: Available throughout the year subject to bond cap availability and underwriting approval
• FHFC soft debt and grant programs: SAIL (State Apartment Incentive Loan), MMRB (Multifamily Mortgage Revenue Bonds), elderly programs, and others

Florida-experienced LIHTC developers maintain ongoing relationships with FHFC staff, understand QAP scoring priorities, and structure applications to maximize award probability.

LIHTC Capital Stack

Typical Florida LIHTC capital stack for ground-up new construction (9% deal):

• LIHTC equity: ~65-75% of total project cost (credits syndicated to corporate investors at $0.85-$1.00 per credit)
• HUD 221(d)(4) construction-to-perm: ~15-25% (FHA-insured, non-recourse, 35-year fully amortizing)
• FHFC soft debt: 0-10% (SAIL, ELI, or other FHFC programs at low or deferred interest)
• Developer fee deferral: 0-5% (deferred developer fee)
• Other gap sources: AHP, state housing trust, local government, philanthropy

4% deal capital stack is similar with smaller LIHTC equity component and additional gap financing requirements.

Florida LIHTC Compliance Requirements

• Income restrictions: Units restricted to households earning below specified AMI thresholds (typically 50%, 60%, or hybrid)
• Rent restrictions: Restricted rents based on AMI and unit size; typically 30% of AMI income threshold
• Compliance period: 15-year initial compliance + 15-year extended use minimum (30 years total). Many Florida LIHTC properties maintain affordability beyond 30 years
• Annual recertification: Tenant income and household composition recertified annually
• FHFC monitoring: FHFC conducts compliance monitoring through annual reports and physical inspections
• Tax credit recapture risk: Non-compliance can trigger credit recapture by IRS — material economic risk requires sophisticated property management

Florida-Specific LIHTC Considerations

• Strong demand: Florida's population growth and rising market rents make LIHTC-restricted units consistently full; turnover low
• FHFC QAP priorities: Annual QAP changes reflect FL housing policy — workforce housing, hurricane resilience, senior, special needs, and geographic dispersion are recurring priorities
• Insurance market dynamics: FL insurance crisis affects LIHTC underwriting; FHFC and HUD require realistic post-storm pricing
• Hurricane resilience: Recent QAPs incentivize storm-hardening features in scoring
• Lake Nona Medical City + healthcare workers: Workforce affordable housing for healthcare workers drives concentrated demand
• Tourism workforce: Hospitality workforce housing demand throughout I-4 corridor and Florida

What is LIHTC?

The Low Income Housing Tax Credit (LIHTC, sometimes 'Section 42 credits') is the federal tax credit program established by the 1986 Tax Reform Act that funds the majority of new affordable rental housing development in the United States. LIHTC provides developers a dollar-for-dollar federal tax credit (claimed over 10 years) in exchange for restricting a percentage of rental units to households earning below 50-60% of Area Median Income (AMI) for a 30-year compliance period. In Florida, the Florida Housing Finance Corporation (FHFC) administers LIHTC allocation.

What's the difference between 9% and 4% LIHTC credits?

9% credits provide approximately 9% annual credit rate and generate ~70% of total project equity through syndication. Awarded through competitive FHFC QAP (Qualified Allocation Plan) process — highly competitive, limited supply, used for ground-up new construction. Typically paired with HUD 221(d)(4) construction-to-perm. 4% credits provide approximately 4% annual credit rate and generate ~30% of total project equity. Non-competitive but require pairing with tax-exempt private activity bonds. Used for acquisition/rehab and preservation. Typically paired with HUD 223(f).

How are LIHTC credits used to fund development?

Developers receive credits over a 10-year compliance period from the federal government via FHFC allocation. Developers typically sell (syndicate) the credits to corporate tax-credit investors at approximately $0.85-$1.00 per credit dollar — generating equity that funds the project. In exchange, the project restricts a percentage of units to households earning below specified AMI thresholds for at least 30 years (15-year initial compliance + 15-year extended use). LIHTC equity typically accounts for 60-80% of total project capitalization on Florida LIHTC deals.

How does Florida Housing Finance Corporation (FHFC) administer LIHTC?

FHFC administers Florida's LIHTC allocation through annual cycles. The QAP (Qualified Allocation Plan) is the annual scoring document defining how 9% credits are awarded — FHFC adjusts QAP priorities annually to address state housing policy goals (workforce housing, hurricane resilience, senior, special needs, geographic dispersion). 9% competitive cycles are typically 4-10x oversubscribed in major Florida metros. 4% non-competitive is available throughout the year subject to bond cap availability. FHFC also operates soft debt and grant programs (SAIL, MMRB, ELI).

What are the compliance requirements for LIHTC properties in Florida?

Income restrictions: units restricted to households below 50%, 60%, or hybrid AMI thresholds. Rent restrictions: typically 30% of AMI income threshold. Compliance period: 15-year initial + 15-year extended use minimum (30 years total). Annual tenant income recertification required. FHFC conducts compliance monitoring through annual reports and physical inspections. Non-compliance can trigger IRS credit recapture — material economic risk requiring sophisticated property management with LIHTC-experienced operators.

Who can help with Florida LIHTC multifamily development?

Michael R. Linton at Linton Global Solutions advises Florida LIHTC participants on capital stack structuring, FHFC allocation strategy, HUD MAP lender pairing for 221(d)(4) or 223(f) take-out, and syndication partner relationships. With 39 years of Florida CRE transaction experience in the Tampa-Orlando I-4 corridor, direct relationships across Florida-active LIHTC syndicators, FHFC-experienced consultants, and HUD MAP lenders, Linton Global Solutions delivers LIHTC execution that reflects actual Florida market dynamics. Call (312) 612-1031.

Article Summary

The Low Income Housing Tax Credit (LIHTC, 'Section 42 credits') is the federal tax credit program that funds the majority of new affordable rental housing development in the U.S. Developers receive credits over a 10-year compliance period and syndicate them to corporate tax-credit investors — generating ~60-80% of total project equity. In exchange, projects restrict a percentage of units to households below 50-60% AMI for 30 years. Florida Housing Finance Corporation (FHFC) administers Florida LIHTC allocation through competitive 9% cycles (~70% equity, new construction, QAP scoring) and non-competitive 4% structures (~30% equity, acquisition/rehab, requires tax-exempt private activity bonds). LIHTC deals typically pair with HUD 221(d)(4) construction-to-perm (9% deals) or HUD 223(f) acquisition/refinance (4% deals). Florida's population growth, healthcare workforce demand, hospitality workforce demand, and persistent affordable housing need make Florida among the most active LIHTC states. Michael R. Linton at Linton Global Solutions advises Florida LIHTC participants across capital stack structuring, FHFC strategy, and HUD MAP lender pairing.

Key Takeaways

• ✓LIHTC = federal tax credit program funding affordable rental housing.
• ✓Developers syndicate credits to corporate investors for project equity.
• ✓9% credits: competitive FHFC QAP, ~70% equity, new construction.
• ✓4% credits: non-competitive with bond financing, ~30% equity, acq/rehab.
• ✓FHFC administers FL LIHTC; QAP changes annually.
• ✓9% competitive cycles 4-10x oversubscribed in major FL metros.
• ✓Pair 9% with HUD 221(d)(4); pair 4% with HUD 223(f).
• ✓Income restrictions: 50% / 60% AMI thresholds typical.
• ✓30-year compliance period (15 initial + 15 extended use).

About Michael R. Linton

Michael R. Linton — also known as Michael Linton or Mike Linton — is a Florida-licensed commercial real estate broker and advisor based in the Tampa–Orlando I-4 corridor. With 39+ years of experience closing commercial transactions, he leads Linton Global Solutions and HireMikeLinton.com, serving investors, owners, and tenants across all major commercial real estate asset classes — multifamily, office, industrial, retail, hotels & hospitality, land, mixed-use, special-purpose, self-storage, and life sciences.

Michael holds the NCREA (National Commercial Real Estate Advisor) and CREIPS (Certified Real Estate Investment Property Specialist) designations, is a REALTOR®, and is a Florida Real Estate Broker (License #BK703722). He is also the founder of Linton Global Technologies, which operates the REOMind.ai AI-powered REO disposition platform serving 500+ banks.

Ready to Talk About Your LIHTC (Low Income Housing Tax Credits) Deal?

Get a free consultation with Michael R. Linton — 39 years of Florida CRE experience. Zero pressure.

Works Cited

1. U.S. Department of Housing and Urban Development. "Low-Income Housing Tax Credit (LIHTC)." HUD, https://www.huduser.gov/portal/datasets/lihtc.html. Accessed Jul 20, 2026.
2. Florida Housing Finance Corporation. "FHFC LIHTC and Multifamily Programs." FHFC, https://www.floridahousing.org/. Accessed Jul 20, 2026.
3. Internal Revenue Service. "IRC Section 42 — Low-Income Housing Credit." IRS, https://www.irs.gov/credits-deductions/businesses/low-income-housing-credit. Accessed Jul 20, 2026.
4. National Council of State Housing Agencies. "NCSHA LIHTC Resources." NCSHA, https://www.ncsha.org/. Accessed Jul 20, 2026.
5. Novogradac. "Affordable Housing Tax Credit Research." Novogradac, https://www.novoco.com/. Accessed Jul 20, 2026.

Disclosure & Compliance

Disclosure: This article discusses proprietary technology developed by Linton Global Technologies. Michael R. Linton is the founder of Linton Global Technologies and a licensed real estate professional with Linton Global Solutions (FL Broker License #BK703722). This content is for informational purposes only and does not constitute investment, legal, or financial advice.

Compliance Statement: All CREDDS and REOMind.ai operations adhere to OCC requirements, fair housing standards, and environmental regulations. Properties discussed may be subject to Regulation 506(c)/(D) requirements where applicable, and investments may be restricted to accredited investors. Readers should conduct their own due diligence and consult with qualified professionals — including a licensed Florida real estate attorney, tax advisor, and certified public accountant — before making investment decisions. Past performance does not guarantee future results.