Low Income Housing Tax Credit Insurance (Section 42)

Section 42 of the IRS code awards investors with tax credits in return for investing equity into development or rehabilitation of affordable rental housing. The tax credits are allocated to the project annually over a 10-year accelerated period and are used by the investor to offset other tax liabilities. Because of this feature, the return on equity to the investor is solid and stable.

However, the tax credits are subject to recapture or future loss in the event the rental units are damaged by fire or other casualty which renders the property wholly or partially unavailable at the end of a given tax year. Insurance is available to mitigate this risk and covers:

- For the entire 10-year period the credits are provided.

- Up to $5,000,000 per site.

- Interest or penalties assessed by the IRS on recapture amounts