Smart, Safe and Predictable

Investing in LIHTC properties, especially those investments that focus on state tax credits, is an exceptional way to generate high, steady and predictable returns with unusually low risk of loss.

The questions and answers below will help to clarify the basics of tax credit investing. To learn more, please contact:
Dan Torgerson
Director of Investor Relations
Email: dtorgerson@aepartners.com
or
Tom Jensen
Director of Transactions
Email: tjensen@aepartners.com
or
by phone at 573.443.2021.

How do low-income housing tax credits work?

• A developer of an affordable property will admit AEP as its limited partner and allocate the tax credits to AEP in return for AEP’s capital contribution to the development, which is used to construct high quality finishes and “buy down” the rents to make them affordable.
• AEP groups multiple properties into a fund and the tax credits are allocated to investors who own a de minimis interest in a qualified affordable property.

How do the actual investment capital and credits work?

The investor may choose to make an up-front investment (cash) in the fund, or finance the investment over 10 years. Each year, the investor receives a K-1, including a schedule detailing the tax credits available to the investor from each property in the fund. The investor makes an accounting entry each year to reflect the reduction in the taxes payable and the carrying value of the investment. The investor will ultimately liquidate its investment through the use of the credits.