What is a "tax credit investor"?

A "tax credit investor" is correctly identified as an entity that purchases tax credits to reduce tax liabilities. This mechanism is pivotal in various tax incentive programs, where investors seek to leverage tax credits to lower their overall tax obligations. By purchasing these credits, the investors can effectively offset tax payments, making it an advantageous financial strategy.

Tax credits, especially those linked to low-income housing, renewable energy, and other qualifying areas, are popular among investors looking to enhance their returns while also participating in socially beneficial initiatives. This dual benefit—financial and philanthropic—attracts many entities, including corporations and financial institutions, that are willing to invest capital in exchange for significant tax savings.

Meanwhile, the other choices highlight different roles or scenarios that do not align with the definition of a tax credit investor. Selling properties for investment does not inherently involve the purchase of tax credits, financing without tax benefits does not utilize the tax credit mechanism, and buying LIHTC properties directly refers to ownership rather than the financial strategy of investing in tax credits. Thus, these alternatives do not encapsulate the essence of a tax credit investor.