The Low-Income Housing Tax Credit (LIHTC) program has been a significant source of new multifamily housing for a quarter century, producing more than 2 million units of affordable rental housing since 1987. In recent years, LIHTCs have provided funding for approximately one-third of all new multifamily housing units built in the United States. In the past few years, however, thousands of properties financed through LIHTC have become eligible to leave the program, ending rent and income-use restrictions. In the worst-case scenario, more than 1 million LIHTC units could leave the stock of affordable housing by 2020, a potentially serious setback to the goal of expanding housing choices for low-income households. In addition to exploring the issue of whether owners of older LIHTC properties continue to provide. affordable housing for low-income renters, this study examines the factors that affect those owners’ decisions to leave the LIHTC program and the implications of these departures for the rental housing market. Based on interviews with owners, with tax credit syndicators and brokers, and with direct investors, the study describes the issues and decisions that LIHTC property owners confront as their tax-credit projects reach the 15-year mark. The in-formation from interviews was analyzed in conjunction with tabulations from the U.S. Department of Housing and Urban Development National LIHTC Database and used to describe what happens to LIHTC properties as they reach the end of their tax-credit compliance period.

The results demonstrate that most LIHTC properties remain affordable despite having reached and passed the 15-year period of compliance with Internal Revenue Service use restrictions. A limited number of exceptions are closely related to the characteristics of the local housing market, as well as to events that occur at Year 15 and beyond. Some LIHTC properties will be recapitalized with new tax credits. Others will be repositioned as market-rate units, especially if they are located in low-poverty areas. Most property owners will confront the issue of how to meet substantial capital needs while preserving the housing as affordable. Future inquiry and research should address these issues as compliance periods continue to expire and tax credit properties continue to age.