March 19, 2024 2:53PM 

# Federal Housing Tax Credit: 2,060 Pages of Brutal Complexity 

By [Chris Edwards](https://www.cato.org/people/chris-edwards) 

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![regulations](/sites/cato.org/files/styles/pubs_2x/public/2024-03/regulations%202.jpg?itok=wJI8LyJW) 

The low-income housing tax credit (LIHTC) provides $13 billion a year of federal subsidies to state governments, which distribute the benefits to favored developers. The program has [many faults](https://www.cato.org/tax-budget-bulletin/low-income-housing-tax-credit-costly-complex-corruption-prone), but perhaps the worst is the absurd complexity.

I described some of the complicated state-level LIHTC rules at [*National Review*](https://www.nationalreview.com/2024/03/central-planning-disguised-as-housing-tax-credits) and at [AEI](https://www.cato.org/blog/affordable-housing-tax-credits-vs-deregulation). Now let’s look at the federal rules. This [webpage](https://www.ncsha.org/resource/housing-credit-reference-guide/) lists documents containing the LIHTC’s federal rules, including IRS regulations, rulings, procedures, and notices. I examined the number of pages in each document as a measure of the complexity that administrators and developers have to deal with. I only included LIHTC-specific documents. I tallied the PDF page counts, as shown in the tables below.

- ***Statute***. The LIHTC statute—Internal Revenue Code Section 42—covers 59 pages of text.
- ***IRS Regulations***. The law is further defined by regulations. I counted 18 regulations for the LIHTC covering 181 pages.
- ***IRS Rulings***. These documents indicate how to apply the LIHTC rules to specific facts. I counted 18 revenue rulings covering 101 pages.
- ***IRS Procedures***. These documents indicate how to apply the LIHTC rules in certain situations. I counted 18 revenue procedures covering 78 pages.
- ***IRS Notices***. These documents provide updates and calculation details for the LIHTC. I counted 10 notices covering 82 pages.
- ***HUD Guide***. Other federal rules include a 794-page guide from the Department of Housing and Urban Development on occupancy requirements for LIHTC buildings. Check out the extraordinary micromanagement [here](https://www.hud.gov/sites/documents/43503HSGH.PDF).
- ***Audit Guide***. The IRS audit guide for the LIHTC is [350 pages](https://www.ncsha.org/wp-content/uploads/IRC_42.pdf) of mind-numbing details. A few other federal rule documents add another 474 pages.
- ***Total Pages***. All in all, federal rules for the LIHTC span at least 2,060 pages.

This single tax credit needs 2,060 pages of federal rules to implement, plus masses of state-level rules, as discussed [here](https://www.cato.org/blog/affordable-housing-tax-credits-vs-deregulation). The winners? Only the lawyers. The LIHTC is not some simple investment incentive, but rather a giant central-planning scheme for the nation’s apartment buildings.

![a](/sites/cato.org/files/styles/pubs_2x/public/2024-03/lihtc%20table%201.png?itok=OwdMyz2l) 

![s](/sites/cato.org/files/styles/pubs_2x/public/2024-03/lihtc%20table%202.png?itok=bRum9TYq) 

![d](/sites/cato.org/files/styles/pubs_2x/public/2024-03/lihtc%20table%203.png?itok=rqzVKrVY) 

![f](/sites/cato.org/files/styles/pubs_2x/public/2024-03/lihtc%20table%204.png?itok=jZ6h2rGg) 

![f](/sites/cato.org/files/styles/pubs_2x/public/2024-03/lihtc%20table%205.png?itok=Gq4XjqFG) 

*Krit Chanwong contributed to this blog post.*

##### Related Tags 

[Economics](https://www.cato.org/economics), [Tax and Budget Policy](https://www.cato.org/tax-budget-policy), [Social Welfare and Poverty](https://www.cato.org/social-welfare-poverty) 

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