Certified Apartment Portfolio Supervisor (CAPS) Practice Exam - Module 1

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What does LIHTC stand for in the context of housing development?

Low Income Housing Tax Credit
Long-term Investment Housing Tax Code
Leading Initiative for Housing Tax Credit
Limited Income Homes Tax Credit

The correct answer is: Low Income Housing Tax Credit

In the context of housing development, LIHTC stands for Low Income Housing Tax Credit. This program was established to incentivize the development and rehabilitation of affordable rental housing for low-income households. By offering tax credits to developers, it encourages the construction of more affordable housing units, helping to address the housing shortage that many communities face. The tax credits allow developers to receive a reduction in their federal tax obligations in exchange for renting a certain percentage of their units to low-income tenants. This effectively lowers the overall cost of development and operation, making it financially viable to create and maintain affordable housing. Understanding LIHTC is crucial for professionals in property management and housing development, as it plays a significant role in financing affordable housing projects and ensuring that there are options available for those who may not be able to afford market-rate rentals.