LIHTC Year 15 Exit Planning Resource Center

How to Prepare for Your Low-Income Housing Tax Credit (LIHTC) Year 15 Exit

As LIHTC properties approach their fifteenth anniversary, general partners must decide how to move forward with them after the initial LIHTC compliance period. A variety of factors must be evaluated in this decision. Will the property remain in the affordable housing stock? Does the property need significant capital repairs? Is there additional value that can be unlocked because of an improved market?

In most cases, the investor limited partners have realized the potential of their initial investment and look to exit. Though planning for the end of the LIHTC compliance period and dissolution of the partnership should be documented in the initial partnership agreement, it can often be ambiguous or silent on key issues relating to this critical event. Therefore, planning should begin by year 11 to allow sufficient time to plan, execute and obtain any third-party approvals that may be required under the financing documents or regulatory agreements.

Delayed planning can result in hurried negotiations and strained relationships with key stakeholders, including investors and lenders. Delay may also cause general partners to settle for a less than desirable outcome for their property. Thoughtful, proactive planning enables general partners to realize the mission and vision for their property while maximizing value for themselves and their investors.

As you plan for the end of a project's LIHTC compliance period, be sure to:

  • Start the process early—preferably by year 11
  • Know your rights and obligations
  • Know your limited partner's rights and obligations
  • Know your market
    • Consider all strategies: transfer/sale, re-syndication, refinance, market-rate conversion
    • Understand timing considerations
  • Mitigate tax implications and tax credit recapture risk

Additional Resources

Rely on an experienced advisor

Baker Tilly has provided financial advisory and consulting services to owners, developers, investors, lenders, syndicators, managers and public housing agencies since the LIHTC program’s inception. Our dedicated team of affordable housing specialists has first-hand experience handling complex transactions involving year 15 LIHTC compliance and exit strategies. We can help you with:

  • Evaluating and structuring exit strategies (transfer/sale, refinance, re-syndication, conversion)
  • Due diligence and planning
  • Partnership capital account analysis
  • Qualified contract advisory services
  • LIHTC application and re-syndication services
  • Tax planning
  • Subsidy layering
  • Market analysis and valuation
  • Financial analysis and modeling
  • Execution and closing
  • Compliance

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