An Introduction to Affordable Housing for Developers
With the affordable housing crisis persisting across the nation, there is a greater need than ever for the development of affordable and low-income rental housing. While frequently a challenging endeavor, some areas of the country have successfully created affordable housing initiatives to encourage developers to take on these projects. For example, in New York City, the Housing New York initiative is expected to reach its goal of creating or preserving 300,000 affordable homes by 2026.
Affordable housing projects are made possible through government incentives such as the Low-Income Housing Tax Credit (LIHTC), grants, loans, or rental subsidies. Obtaining government funding comes with compliance requirements from a state’s housing agency, the Department of Housing and Urban Development, or the Internal Revenue Service. Accounting support can be helpful throughout this process to fulfill compliance requirements and maintain good standing each year.
The many constraints on developing and managing affordable housing can be overwhelming, so it’s important to take the time to determine long-term financial risk and operational goals before embarking on a project. Accounting specialists can help guide developers through the full lifecycle of a housing project, including:
- Break down technical questions from a state’s housing agency and provide guidance while answering them
- Assist with compliance aspects such as yearly audits, tax certifications, and tax credits
- Serve as a liaison between developers and investors to see that tax credits are fully realized
Affordable housing projects are highly regulated, and the process can feel complex and ever changing. We recommend bringing on a team of experienced professionals early in the process to assist developers through the steps to begin their projects and guide them as it progresses.
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