Lewes CPA office
(302) 645-6216
Lewes CPA fax
(302) 645-9808		 Lewes Payroll office
(302) 645-5700
Lewes Payroll fax
(302) 645-0395		 Milford CPA office
(302) 422-2301
Milford  CPA fax
(302) 424-4449

Progar & Company, P.A.

Certified Public Accounting services for businesses and individuals

Low-income housing tax credit changes in the 2008 Housing Act (MS Word)

Low-Income housing tax credit changes in the 2008 Housing Act (.pdf)

 

Low-income housing tax credit changes in the 2008 Housing Act

Dear Reader,

Included in the $15.1 billion package of housing tax incentives in the recently enacted “Housing Assistance Tax Act of 2008” (the Housing Act) are numerous provisions affecting the low-income housing tax credit. Specifically, the new legislation:

  • Allows a temporary 20 cents per capita (about 10%) increase in the low-income housing tax credit volume limit for 2008 and 2009, and also increases the small state minimum annual cap by 10%.
  • Permits low-income housing tax credits to offset the alternative minimum tax (AMT) (effective for low-income housing credits attributable to buildings placed in service after Dec. 31, 2007).
  • Eliminates the housing credit recapture bond requirement on the disposition of a building and replaces it with an extended statute of limitations of three years after the taxpayer notifies IRS of noncompliance with the low-income housing credit rules.
  • Temporarily sets the annual housing credit percentage at 9%. The 70% present value credit rate is commonly called the “9% credit,” but because interest rates are low, its actual value has been about 7.8% annually. The new legislation sets a 9% floor on this rate for buildings placed in service after enactment and before Dec. 31, 2013, enough to increase credits for a development by about 15% (i.e., from 7.8% to 9%).
  • Eases the general public use requirement, by providing that a low-income housing project won't fail that requirement because of occupancy restrictions or preferences that favor certain types of tenants.
  • Includes numerous technical changes to the low-income housing tax credit.

I hope this information is helpful. If you would like more details about these provisions or any other aspect of the new law, please do not hesitate to call.