Affordable housing finance
Year 15
End of the LIHTC compliance period: recapture risk expires, the credit investor exits, and the asset's next move — resyndication, refi or sale — is decided.
Definition
The credit's obligations run in layers, and year 15 closes the first: the 15-year compliance period of IRC § 42, during which noncompliance triggers credit recapture. At its end, recapture exposure expires and the investor — whose economics were the credits — exits under the partnership agreement's puts, options and right-of-first-refusal stack (nonprofit ROFRs at debt-plus-exit-taxes are common). The extended-use covenant does not end with it: California's 55-year regulatory agreements under the CTCAC regulations keep rents restricted for decades after.
Why it matters in an underwrite
Year 15 is when the value questions get answered: buy out the investor (capital accounts and exit taxes drive the price), resyndicate with new 4% credits and rehab capital, refinance the restricted NOI, or sell subject to the covenant. Underwrite the Year-15 rights stack at acquisition — ROFRs, purchase options, exit-tax indemnities — because whoever holds those rights, not the open market, sets the price. On aging assets the resyndication math usually wins: it funds the rehab and resets the compliance clock.
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.