Understanding LIHTC in 2025: A Developer's Perspective
Our CEO Gerald Burr shares insights on navigating Low Income Housing Tax Credits and what developers need to know about recent policy changes.
The Low Income Housing Tax Credit (LIHTC) program remains the nation's primary tool for developing affordable rental housing. As we navigate 2025, several policy changes and market dynamics are reshaping how developers approach LIHTC projects. Here's what you need to know.
LIHTC Program Basics
For those new to affordable housing development, LIHTC provides tax credits to developers who build or substantially rehabilitate affordable rental housing. These credits can be sold to investors, generating equity that makes projects financially feasible. The program has produced over 3 million affordable units since its inception in 1986.
2025 Policy Changes
Recent legislative updates have impacted LIHTC development in several key ways:
- Increased credit allocations to states, expanding development capacity
- Enhanced basis boosts for projects in qualified census tracts
- Streamlined compliance monitoring requirements
- Extended deadlines for placed-in-service requirements
- New sustainability incentives for energy-efficient construction
Current Market Dynamics
The LIHTC market in 2025 is characterized by strong investor demand coupled with rising construction costs. Successful developers must carefully balance these factors through value engineering, efficient design, and strategic site selection. Competition for tax credit allocations remains fierce, making quality applications and strong track records essential.
Best Practices for Success
After 18 years of LIHTC development, we've learned that success requires:
- Strong partnerships: Build relationships with experienced syndicators, investors, and housing authorities
- Market expertise: Understand local housing needs and site selection criteria
- Financial sophistication: Master complex layered financing structures
- Compliance rigor: Maintain perfect records and meet all requirements
- Quality focus: Never sacrifice construction quality for cost savings
Navigating State Allocations
Each state administers its LIHTC program through a Qualified Allocation Plan (QAP). Virginia's QAP prioritizes projects that serve extremely low-income households, promote economic integration, and demonstrate community support. Understanding your state's priorities and scoring criteria is crucial for successful applications.
The Future of LIHTC
Looking ahead, LIHTC will continue to be essential for meeting America's affordable housing needs. Proposed federal legislation could expand the program further, while growing awareness of the housing crisis is driving increased political support. Developers who can navigate the program's complexities while delivering quality housing will find tremendous opportunities.
Canterbury's LIHTC Expertise
At Canterbury Development Group, LIHTC development is our specialty. We've successfully closed on multiple LIHTC projects, maintaining a 100% compliance record while delivering quality housing that exceeds requirements. Our expertise spans all aspects of the LIHTC process, from application through permanent stabilization.