FASB - Guidance on investments in low-income housing tax credits 

January 24:  The FASB issued guidance that will let investors in low-income housing tax credit (LIHTC) entities that meet certain conditions account for the investments entirely in income tax expense, which stakeholders believe more accurately reflects the economics of the investments.

The LIHTC program was designed to encourage investments in the construction and rehabilitation of low-income housing projects. LIHTC investors receive tax credits over 10 years but are subject to a 15-year recapture period.


Low-income housing projects typically generate (and pass along to investors) pre-tax losses after considering the effects of depreciation, but the associated tax benefits of those losses, when considered together with the credits, generally result in a positive return to investors.


Read a January 2014 report [PDF 967 KB] prepared by KPMG LLP: Defining Issues: FASB Issues Guidance on Investments in Low Income Housing Tax Credits




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