Low-Income Housing Tax Credit Program Legislative Update
Recent LIHTC Legislation <ul><li>July, 2008, Housing and Economic Recovery Act of 2008 </li></ul><ul><li>February, 2009, A...
Housing and Economic Recovery Act of 2008  Major Provisions <ul><li>LIHTC per capita allocation cap increased by $0.20 in ...
American Recovery and Reinvestment Act of 2009 (Stimulus Bill)  <ul><li>Tax Credit Assistance Program -- TCAP </li></ul><u...
Tax Credit Assistance Program -- TCAP <ul><li>Grants to state housing finance agencies, distributed to projects in a compe...
Exchanged Credits Treasury Guidance <ul><li>States must enter into legally binding agreements with entities receiving suba...
Further Legislative Options for Restoring Housing Credit Program <ul><li>Carryback of Unused Credits  </li></ul><ul><li>Ex...
Carryback of Unused Credits <ul><li>For taxpayers who have unused LIHTCs on 2008, 2009, and 2010 tax returns </li></ul><ul...
Extension and Expansion of Exchange Program <ul><li>Extension of current program through 2010 </li></ul><ul><li>Conversion...
Change in Passive Loss Rules <ul><li>Currently investors can use housing tax credits amounting to about $8,750 a year </li...
Conclusion <ul><li>Questions </li></ul>
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June 2009 Low-Income Housing Tax Credit Program

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June 2009 Low-Income Housing Tax Credit Program

  1. 1. Low-Income Housing Tax Credit Program Legislative Update
  2. 2. Recent LIHTC Legislation <ul><li>July, 2008, Housing and Economic Recovery Act of 2008 </li></ul><ul><li>February, 2009, American Recovery and Reinvestment Act of 2009 </li></ul>
  3. 3. Housing and Economic Recovery Act of 2008 Major Provisions <ul><li>LIHTC per capita allocation cap increased by $0.20 in each state for 2008 and 2009 </li></ul><ul><li>MRB and multifamily housing bonds increased by $10 billion for 2008 </li></ul><ul><li>LIHTC credits and housing bonds exempted from AMT </li></ul><ul><li>Flat 9% credit for 70% present value deals </li></ul><ul><li>State discretion to provide 130% of the normal credit amount to designated projects </li></ul><ul><li>Repeal of recapture bonds </li></ul>
  4. 4. American Recovery and Reinvestment Act of 2009 (Stimulus Bill) <ul><li>Tax Credit Assistance Program -- TCAP </li></ul><ul><ul><li>funded at $2.25 billion for 2009 </li></ul></ul><ul><li>Tax Credit Exchange Program </li></ul><ul><ul><li>Up to 40% of 2009 Allocation and 100% of Unused 2008 Allocation – Up to $3 billion. </li></ul></ul>
  5. 5. Tax Credit Assistance Program -- TCAP <ul><li>Grants to state housing finance agencies, distributed to projects in a competitive process based on the state’s qualified housing allocation plan. </li></ul><ul><li>Grants may be used in projects receiving allocations in 2007, 2008 or 2009, with priority given to projects expected to be completed by the end of 2012. </li></ul><ul><li>TCAP funds can be used with tax-exempt bond projects, and with disaster area credits, as long as the state awards the project a nominal amount of allocated credits. </li></ul>
  6. 6. Exchanged Credits Treasury Guidance <ul><li>States must enter into legally binding agreements with entities receiving subawards that incorporate all the program requirements of section 42, including requirements for recapture and commitment to the 15 year compliance period. </li></ul><ul><li>Extensive reporting requirements requiring the agencies to identify the number of construction and non-construction jobs created and retained as a result of the exchange program. </li></ul><ul><li>Many state agencies inclined to use exchange funds only for projects with investor capital. </li></ul>
  7. 7. Further Legislative Options for Restoring Housing Credit Program <ul><li>Carryback of Unused Credits </li></ul><ul><li>Extension of Exchange Provision </li></ul><ul><li>Expansion of Exchange to Cover Bond Deals </li></ul><ul><li>Change in Passive Loss Rules </li></ul>
  8. 8. Carryback of Unused Credits <ul><li>For taxpayers who have unused LIHTCs on 2008, 2009, and 2010 tax returns </li></ul><ul><ul><li>Reinvestment requirement </li></ul></ul><ul><li>For investors investing after 2009 </li></ul><ul><ul><li>Five year carryback through out life of investment </li></ul></ul>
  9. 9. Extension and Expansion of Exchange Program <ul><li>Extension of current program through 2010 </li></ul><ul><li>Conversion of private activity bond authority </li></ul><ul><ul><li>$3 of bond activity for $1 of exchange funds </li></ul></ul><ul><ul><li>Limited to the higher of: 1) the average amount of multifamily housing bonds used in the state for the 2004 to 2007 period, or 2) 10% of the overall private activity bond cap for the year. </li></ul></ul><ul><ul><li>Could be about $2 billion annually in additional exchange funds </li></ul></ul>
  10. 10. Change in Passive Loss Rules <ul><li>Currently investors can use housing tax credits amounting to about $8,750 a year </li></ul><ul><li>Option would be to increase limit to $80,000 to $100,00- in credits annually </li></ul><ul><ul><ul><li>For public funds and private placements </li></ul></ul></ul>
  11. 11. Conclusion <ul><li>Questions </li></ul>
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