What is the primary purpose of the Low Income Housing Tax Credit (LIHTC)?

The primary purpose of the Low Income Housing Tax Credit (LIHTC) is to incentivize the development of affordable rental housing for low-income individuals and families. This goal is achieved by offering tax credits to developers of affordable housing, which in turn reduces their tax liability. By making it financially attractive to construct and maintain properties that are affordable, the LIHTC program addresses the significant shortage of rental units that are accessible to low-income households.

This focus on affordable housing is essential, as it helps to create more housing options for those who may otherwise struggle to find suitable accommodation within their budget. The LIHTC has been a key driver in increasing the availability of affordable rental units across the country, playing a crucial role in alleviating housing insecurity for many families.

The other options listed do not align with the primary goal of the LIHTC. For instance, providing loans for first-time homebuyers, funding public transportation projects, and supporting luxury housing developments do not relate to the specific aim of increasing affordable rental housing stock, highlighting why they are not the correct answers.