Affordable Housing and Tax Credit Developments NationallyLegislation to Change Student Rule for Low Income Housing Tax Credit (LIHTC) Housing

October 7, 2011by George Danneman

U.S. Congressmen Jim McDermott (D-WA), Erik Paulsen (R-MN), and Keith Ellison (D-MN) introduced legislation (H.R. 3076) to allow formerly homeless young people to pursue a four-year college degree and still qualify for Low Income Housing Tax Credit (LIHTC) housing.

Currently, Section 42 of Internal Revenue Code prohibits low-income tenants from being full-time students, the “student rule.”  A number of exceptions to the student rule exist in Section 42 (i)(3)(D), including former foster youth, single parents, and parents receiving public assistance.  The legislation attempts to add homeless youth to this exemption.

As Congressman McDermott stated, “[e]ducation remains the best hope for homeless youth to escape poverty as adults…Today, our homeless youth must choose between being homeless or pursuing a full-time education. That is wrong, and this simple fix would have a significant impact in ensuring these youth can reach their educational goals.”

The legislation is estimated to cost less than $1 million over 10 years.

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