University of Central Florida (UCF) REE3043 Fundamentals of Real Estate Practice Exam 1

Tax credits on low-income housing are a financial incentive designed to encourage investment in affordable housing. One of the key features of these tax credits is their applicability to a broad range of income earners, particularly both active and portfolio income earners.

Active income earners are individuals who are involved in regular business activities, whereas portfolio income earners derive income from investments, such as dividends or interest. The structure of the low-income housing tax credit program allows for benefits to be realized by both groups. This means that individuals and entities that invest in low-income housing projects can leverage these credits to reduce their tax liabilities, regardless of whether the income they earn is from active business activities or passive investments.

This versatility enhances the attractiveness of low-income housing investments, helps mobilize capital, and thus supports the construction and rehabilitation of affordable housing. Therefore, it is correct that tax credits on low-income housing can be applied to both active and portfolio income earners.