Tax credit expansion bill passes Ways and Means Committee
by Richard Brown Supportive Housing Add commentsThe House Ways and Means Committee has approved H.R. 5720: Housing Assistance Tax Act of 2008 a bill sponsored by committee Chairman Charles Rangel (D-N.Y.). The bill according to Affordable Housing Finance will “temporarily expand the low-income housing tax credit (LIHTC) and tax exempt housing bond programs, revise some of the program rules and requirements, and create a new tax credit for first-time home buyers.”
Specific changes include:
-
The bill would increase the annual per capita cap for the LIHTC by 20 cents in 2008 and 2009, raising the current-year ceiling to $2.20. It would also provide an aggregate increase of $10 billion in the tax-exempt private-activity bond cap for the 2008-2010 period, with the additional authority to be used for rental and ownership housing.
The additional housing bonds, which would be allocated among the states based on population, could be used to refinance adjustable-rate subprime home mortgage loans made after December. 31, 2001, and before Jan. 1, 2008, that the bond issuer determines would be reasonably likely to cause financial hardship for the borrower if not refinanced.
The housing tax credit provisions would eliminate the current difference in the credit rates for new and existing buildings and establish a minimum rate equal to the average of the rates for the previous 12 months. In addition, the definition of federally subsidized buildings, which can only use the 4 percent credit, would be narrowed to apply only to buildings financed by tax-exempt bonds. That means, for example, that HOME-assisted projects could still get the 9 percent credit.
In addition, federal grants would have to be subtracted from eligible basis only if they are received before the beginning of the 15-year tax credit compliance period.
The bill would also eliminate the ban on combining tax credits and Sec. 8 moderate-rehabilitation assistance. At the same time, it would raise the thresholds for rehabilitation to the greater of 20 percent of the basis of the building or $6,000 per unit, with the per-unit minimum to be adjusted annually for inflation. The current requirements are the greater of 10 percent of basis or $3,000 per unit.
Other changes would make state-designated projects eligible for the 30 percent basis increase now available for projects in difficult development areas and qualified census tracts, and would increase the allowable basis for community facility space to 15 percent of the first $5 million in eligible project basis and 10 percent of the remainder.
The bill would also coordinate some of the rules for tax-exempt and bond financed projects, including the next-available-unit rule, the student housing eligibility requirements, and the rules for single room occupancy projects. In addition, the legislation includes hold-harmless provisions for bond-financed rental housing projects that find their tenants suddenly exceeding income limits when area median incomes (AMIs) are reduced.
The first-time home buyer tax credit would provide a credit of up to $7,500 to be taken over two years. The allowable credit would be phased out for incomes between $70,000 and $90,000 ($140,000 and $160,000 for those filing joint tax returns). The credit would be available for home purchases made between April 8, 2008, and April 1, 2009.
The credit would have to be paid back without interest over 15 years. The recapture would be accelerated if the property is disposed of or ceases to be the purchaser’s principal residence before the end of the 15-year period.
Related Monarch Blog posts
Print This Post
Thanks for visiting! If this is your first time here why not subscribe to the RSS feed.
You can subscribe to a daily email update of the Monarch Housing's Blog by clicking here.
You can also follow this discussion by checking the "Notify me of follow up comments via e-mail " box or by subscribing to the comments RSS feed.
Please scroll down to leave your comment.
Recent Comments