Housing Assistance: An Inventory of Fiscal Year 2010 Programs, Tax Expenditures, and Other Activities

U.S. Government Accountability Office

Administering Agency/Entity	Internal Revenue Service
Short Description	Allows holders of rental housing bonds to exclude interest from taxable income. Interest income on state and local bonds used to finance the construction of multifamily rental housing units for low- and moderate-income families is tax exempt. These bonds were subject to an annual volume cap (for private activity bonds) equal to the greater of $90 per state resident or $274 million in 2010. Tax-exempt rental housing bonds are also used for housing financed with an approximately 4 percent low-income housing tax credit—intended to subsidize about 30 percent of the qualified basis in present value terms—of the acquisition costs for existing buildings. Projects must satisfy one of two income-targeting requirements: 40 percent or more of the units must be occupied by tenants with incomes 60 percent or less of the area median gross income, or 20 percent or more of the units are occupied by tenants with incomes 50 percent or less of area median gross income.
Primary Purpose	Assistance for financing rental housing
Type of Housing Supported	Rental housing
Type of Assistance	Tax exclusion, exemption, or deduction
Estimated Revenue Loss1	$1,050,000,000; rental housing bonds are classified as private-activity bonds because a substantial portion of their benefits accrues to individuals or business, rather than to the general public.