The tax credits offered for low-income housing (LIH) development can make it a highly desirable investment in some cases. However, before investing your money in a LIH project, you should know the primary drawbacks:
Low-income housing investments are usually suited to the needs of high-net-worth individuals and C corporations, although some middle-income individuals may want to consider LIH investment if they expect federal income tax liabilities over a 10- to 15-year period. States may also set minimum income and minimum net worth levels.
If you are considering this type of investment, consult your professional tax and legal advisors for more specific recommendations concerning your particular situation.