Some of our Villas by Mary T. are regulated by the Housing Tax Credit (HTC) program. Formerly known as Low Income Housing, the HTC program was designed to stimulate development of affordable housing for persons of low to moderate income. It was created by the enactment of Section 42 of the Internal Revenue Code, part of the Tax Reform Act of 1986.

This major change to the tax code disallowed many traditional tax shelters for high-end investors. In return, it sought to encourage affordable housing development by offering alternative tax relief in the form of tax credits for the development and operation of low- to moderate-income housing. Furthermore, rather than tying the tax benefit to the operating loss on a building, it was now tied to the continuation of housing low-income and moderate-income residents.

Fundamentally, the Housing Tax Credit Program is a financing vehicle regulated by the IRS. In short, investors purchase tax credits from the owner who has been allocated a specified number of tax credits by its state government. The purchase of these tax credits increases the owner's down payment on the project. This in turn lowers the mortgage and financing costs, thereby resulting in lower "affordable" rents for the resident. The owner agrees to offer affordable rental housing to households with an annual gross income of 60% or less of county median income. They also agree to maintain housing for no less than 30 years.

It is important to differentiate the tax credit program from the federal housing subsidy programs. The Section 42 tax credit program itself does not provide deep subsidy as does the Section 8 program and cannot be considered a housing program for households qualifying under the very low income guidelines of other federal programs. One of the primary benefits of the program is that it offers residents rent ceilings.