The qualified contracting process allows LIHTC property owners to unsubscribe from the program after the first 15 years. To take advantage of this process, the owner must inform the tax authorities of his intention to sell and the agency would then have one year to find a qualified buyer. If no qualified buyer is produced within the 365-day period, the owner may be exempted from any restrictions and obligations of use. However, if the owner refuses to sell the property, he must respect the extended restrictions on use. Note that this option is only available to owners who have not waived their right to apply for a qualified contract or accept a longer use contract when signing their limited use agreement with the HFA state. . In the second half of 2010, the market stabilized as non-traditional investors began to fill the investment gap. Supporters of LIHTC have come together around legislative proposals to ensure that investments remain stable, both in the short term and in the future. The Center for Health Studies at Harvard University and the Center for Real Estate at the Massachusetts Institute of Technology have identified potential ways to improve LIHTC to make it more effective. [11] [12] [13] Critics of the LIHTC argue that federal subsidies per unit of new construction are higher than they should be because the various intermediaries participate in the funding – organizers, syndicators, complements, managers and investors – each being compensated for its efforts. As a result, a significant portion of the federal tax subsidy is not directly devoted to the creation of new rental housing. Critics also see the complexity of the law and regulation as another potential gap.

Another disadvantage is that some public housing finance authorities tend to approve LIHTC projects in a way that concentrates low-income municipalities, where they were historically separated and where economic opportunities could be limited. Finally, while the LIHTC can help build new affordable housing, maintaining this accessibility is a challenge once the necessary compliance periods are over. The U.S. Tax Reform Act of 1986 (TRA86) introduced many incentives for investment in housing, while leaving incentives for residential ownership. Given that low-income people live in rental housing rather than self-occupied housing, this would have reduced the new supply of housing available to them. The low-income Housing Tax Credit (LIHTC) was added to TRA86 to create a certain balance and encourage investment in multi-family buildings for those in need of affordable housing. Over the next 20 years, it became an extremely effective tool [citation needed] for the development of affordable rental housing….