Representative Neguse Introduced Legislation to Close LIHTC Qualified Contract Loophole
Aug 04, 2025
By Libby O’Neill, NLIHC Senior Policy Analyst
Representative Joe Neguse (D-CO) reintroduced the “Save Affordable Housing Act” (H.R. 4572) on July 21, which would help preserve housing developments financed by the Low Income Housing Tax Credit (LIHTC) by reforming the “qualified contract” (QC) process. NLIHC supports this legislation as an important reform to the LIHTC program.
Under the QC process, LIHTC owners can discontinue federal and state affordability restrictions after just 15 years rather than the 30-year minimum requirement. This loophole has led to a substantial loss of affordable rental homes, harming low-income residents and wasting scarce federal investments. Fully eliminating QCs would help protect the affordability of LIHTC properties by holding developers to the 30-year minimum affordability period.
The “Save Affordable Housing Act” would help prevent the premature loss of affordable homes and ensure LIHTC properties remain affordable for at least 30 years as Congress intended. If enacted, the bill would repeal the qualified contract option for future housing developments financed with LIHTC. For existing properties, the bill corrects the statutory purchase price, making it based on a property’s fair market value as affordable housing.
Several states have instituted requirements that LIHTC property owners waive their right to a QC, and some federal multifamily financing programs have either incentivized or required waiving the right to a QC, including the Federal Housing Administration’s (FHA’s) Multifamily rental and Risk Share programs, and the U.S. Department of Agriculture’s (USDA’s) Section 538 program (See Memo, 8/19/24, 12/23/24). However, the QC loophole has not been directly addressed in LIHTC statute.
NLIHC supports reforms to the LIHTC program that would better target LIHTC resources to renters with extremely low incomes and those in rural and Tribal communities, as well as reforms that require long-term affordability, tenant protections, and improved accessibility standards.
Read the bill text here.
Read more about needed reforms to the LIHTC program here: http://bit.ly/44WrkHn, http://bit.ly/4o0xyNT