The Valuation of Federally Subsidized Housing

The complex federal incentives for private investment in low- and moderate-income housing have produced decades of judicial decisions on the appropriate local tax treatment of these properties. This enormous volume of thoughtful legal analysis offers insights relevant to issues beyond the valuation of subsidized housing, and illuminates many fundamental assessment questions. Many subsidized developments are not in any simple sense public housing. The federal government has long offered incentives for private parties to own and operate low- and moderate-income rental apartments as a financial investment. These structures are generally not tax-exempt, and courts have struggled to characterize them for property tax purposes, in the process confronting a wide range of fundamental issues with implications far beyond the specific issue of rent-restricted property.

This working paper includes an appendix with examples of cases and legislation addressing the taxation of subsidized rental housing in 40 states.