What could happen if an owner fails to comply with LIHTC requirements?

If an owner fails to comply with Low-Income Housing Tax Credit (LIHTC) requirements, the most significant consequence is that they could face penalties, including the recapture of credits. The LIHTC program is designed to ensure that affordable housing is provided to low-income individuals, and strict compliance with program regulations is enforced.

When an owner does not adhere to these requirements, they may not only lose the tax credits they have already received but may also be required to pay back previously claimed credits. This recapture can be particularly severe, as it might involve repaying credits for several years, which can have a substantial financial impact on the property owner. This consequence serves to uphold the integrity of the program and ensure that affordable housing is maintained for those in need.

Other ramifications of non-compliance may include financial penalties or restrictions on future participation in programs, but the recapture of credits stands out as a primary and immediate consequence, emphasizing the importance of adhering to LIHTC regulations.