Affordable housing finance
4% credit
The as-of-right LIHTC track for bond-financed projects — ~30% of qualified basis in present value; the bond allocation, not a credit round, is the gate.
Definition
Projects financed with tax-exempt private activity bonds under IRC §§ 142(d)/146 earn LIHTC outside the competitive ceiling under § 42(h)(4): credits at the statutory 4% floor, roughly 30% of qualified basis in present value, on all qualified basis once the bond-financing test is met — 25% of aggregate basis for bonds issued after 2025 (50% before). There is no CTCAC lottery, but in California the bond volume cap itself is allocated competitively by CDLAC under the CDLAC regulations.
Why it matters in an underwrite
Shallower subsidy, bigger pipeline: 4% executions carry most large new-construction, acquisition/rehab and resyndication deals, but the equity covers roughly half of what a 9% award would, so feasibility turns on soft debt and basis management. The 2025 drop to a 25% bond test lets deals right-size bonds instead of over-issuing to pass 50% — cutting issuance costs and stretching CDLAC volume cap across more projects.
Sources & related guides
See also
See the term in the law itself
Read the controlling text in the Code Library, or ask the AI how it applies to your project.
Last reviewed 2026-07-29. General information, not legal advice.