In late August, the Georgia Supreme Court delivered a unanimous and consequential decision in Gateway Pines Hahira, LP v. Lowndes County Board of Tax Assessors. It clarifies that county tax assessors may use the income approach when valuing affordable housing properties— including those benefiting from Section 42 low-income housing tax credits (LIHTCs)— but they must exclude the credits themselves from the income stream unless they generate actual cash income to the owner.
This is significant because it overturns an earlier Court of Appeals decision that had barred the income approach altogether on the grounds that tax credits weren’t “actual income.” The Supreme Court corrected that view, ruling that the income approach remains valid— so long as assessors focus only on rental income and expenses, not the paper value of tax credits.
This may well encourage more affordable housing development because with greater certainty and transparency developers can now better predict how their properties will be assessed. And that reduces risk and helps attract financing and developers can more confidently forecast returns when structuring LIHTC projects.
Moreover, the income approach captures actual revenue potential, the hypothetical value of credits. That makes the economics more realistic and may encourage more affordable projects in competitive markets.
Still, affordable housing still faces steep hurdles: high construction costs, complicated credit financing and lengthy compliance requirements. The ruling removes one financial obstacle but doesn’t solve all the challenges.
Nevertheless, it’s a meaningful boost.
But what is “affordable housing, anyway? It generally means housing that costs no more than 30 percent of a household’s income. In practice, U.S. policy often uses “affordable” to describe units reserved for lower-income households. Depending on the program, these may be limited to residents earning 30 percent to 80 percent of the area median income (AMI).
The federal Low-Income Housing Tax Credit (LIHTC) program— Section 42 of the tax code—has been the main tool for building affordable rentals. In plain English it works by giving developers tax credits, which they sell to investors to raise cash for construction. In return, the developer must agree to limit rents and reserve a portion of units for lower-income tenants.
For a project to qualify, developers must choose one of three options for the set aside units: At least 20 percent of units for households earning less than or equal to 50 percent of AMI; or, at least 40 percent of units for households earning less than or equal to 60 percent of AMI; or, a blended option where at least 40 percent of units are reserved across different income levels (20 percent–80 percent of AMI) so long as the average doesn’t exceed 60 percent AMI.
There are also rent limits and durations requirements that apply as well.
For readers outside the tax and development world, the takeaway is simple: Section 42 ensures rents remain tied to income levels, keeping units accessible for families that would otherwise be priced out.
And this ruling may well encourage more affordable housing construction.
Because assessors can no longer count the paper value of tax credits as income, valuations should come in lower than under past practices. That means property taxes on LIHTC projects should more closely match their real-world earning potential. Lower assessments reduce operating costs for owners, which in turn makes these projects more financially sustainable long-term.
The Court’s August 2025 decision restores a fairer way to value affordable housing: using the income approach but excluding non-cash credits. This should lead to more accurate— and usually lower— assessments, giving developers a stronger reason to build and maintain these projects.
While the ruling won’t erase the broader challenges of affordable housing, it is a step toward making the economics work. And for business leaders, policymakers and local governments, understanding how “affordable” is defined and how Section 42 functions is key to seeing why these ruling matters: tax law and housing policy intersect directly with the bottom line.
Gary Wisenbaker is a REALTOR© with Century 21 Realty Advisors in Valdosta.
