Tax Credit Program Comparison
Compare five key tax credit programs used in real estate finance and community development. Each program offers unique benefits for different project types.
| Feature | LIHTC | NMTC | HTC | Opportunity Zone | Brownfield |
|---|---|---|---|---|---|
| Purpose | Expand affordable rental housing | Spur private investment in low-income and distressed communities | Preserve and rehabilitate historic, income-producing buildings | Encourage long-term private investment in low-income and distressed communities | Incentivize cleanup and redevelopment of contaminated properties |
| Credit Amount | 9% | 39% | 20% | Deferral | Typically |
| Claim Period | 10 years (credits claimed annually) | 7 years | 5 years (4% annually) | Varies (deferment and exclusion tied to holding periods) | Varies |
| Best Use | Cornerstone financing for affordable... | Financing community-serving projects like... | Adaptive reuse of historic... | Long-term investments in underserved... | Redeveloping contaminated or underutilized... |
Low-Income Housing Tax Credit
Expand affordable rental housing
Established
1986 (Tax Reform Act)
Administered By
IRS and State Housing Finance Agencies
Credit Amount
9% (competitive) or 4% (bond-financed) of eligible costs
Claim Period
10 years (credits claimed annually)
Eligible Projects
Affordable rental housing
Target Beneficiaries
Households at or below 60% AMI
Compliance
15-year compliance period (often extended to 30+ years)
Impact
~3.7 million affordable units built
New Markets Tax Credit
Spur private investment in low-income and distressed communities
Established
2000 (Community Renewal Tax Relief Act)
Administered By
U.S. Treasury's CDFI Fund
Credit Amount
39% of Qualified Equity Investment over 7 years (5% for first 3 years, 6% for last 4 years)
Claim Period
7 years
Eligible Projects
Community facilities, businesses, mixed-use real estate in low-income census tracts
Target Beneficiaries
Residents of low-income census tracts
Compliance
At least 85% of funds invested in qualified projects
Impact
7,100+ projects financed, leveraging $8 private investment per $1 federal credit
Historic Tax Credit
Preserve and rehabilitate historic, income-producing buildings
Established
1976 (IRC Section 47)
Administered By
National Park Service, IRS, State Historic Preservation Offices
Credit Amount
20% of Qualified Rehabilitation Expenditures
Claim Period
5 years (4% annually)
Eligible Projects
Certified historic buildings used for income-producing purposes
Target Beneficiaries
Communities with historic assets
Compliance
Must meet preservation standards; 5-year recapture risk
Impact
50,000+ historic properties preserved, $127B private investment
Opportunity Zone
Encourage long-term private investment in low-income and distressed communities
Established
2017 (Tax Cuts and Jobs Act)
Administered By
U.S. Treasury
Credit Amount
Deferral of capital gains taxes by reinvesting into QOFs; step-up in basis of 10% after 5 years, 15% after 7 years; exclusion of gains on QOF investments held for 10+ years
Claim Period
Varies (deferment and exclusion tied to holding periods)
Eligible Projects
Real estate development, business investments, infrastructure
Target Beneficiaries
Census tracts nominated by states and certified by Treasury
Compliance
Investments must be in designated Opportunity Zones
Impact
Significant tax benefits for long-term investments
Brownfield Tax Credit
Incentivize cleanup and redevelopment of contaminated properties
Established
Varies by state/local jurisdiction
Administered By
State and local governments
Credit Amount
Typically a percentage of eligible remediation and redevelopment costs
Claim Period
Varies
Eligible Projects
Properties with environmental contamination requiring cleanup
Target Beneficiaries
Developers and investors undertaking brownfield redevelopment
Compliance
Must meet environmental cleanup standards
Impact
Supports environmental cleanup and economic revitalization of contaminated sites
Strategic Layering
Tax credits can be strategically combined to maximize financing potential while respecting program compliance rules.
LIHTC + HTC
Common for affordable housing in historic buildings (e.g., mill-to-housing conversions)
LIHTC + NMTC
Used when housing is part of larger community development projects (e.g., mixed-use with clinics)
NMTC + HTC
Effective for redeveloping historic commercial or community facilities in distressed areas
OZ + Brownfield
Can be layered with other credits to attract capital with deferred and excluded gains while addressing cleanup costs
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