The Affordable Housing Tax Credit Coalition [main graphic] A group of developers, syndicators, lenders, nonprofit groups, public agencies, and others concerned with the low-income housing tax credit.
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Affordable Housing Tax Credit Coalition Legislative Priorities

Simplification

  • Eliminate the 4 percent Housing Tax Credit limit for new federally subsidized properties, except Housing Bond-financed developments not subject to the Credit allocation ceiling.

  • Allow HOME-assisted properties located in qualified census tracts (QCT) or difficult development areas (DDA) to receive the 30 percent increase in eligible basis permitted other properties.

  • Revise the Housing Tax Credit scattered site rule to require Housing Tax Credit units to be proportionally distributed among a development?s buildings.

  • Coordinate multifamily bond program and Housing Tax Credit program rules:

    • Conform the multi family bond next available unit rule to the Credit rule when Bonds and Credits are combined.
    • Apply the Housing Tax Credit program?s definition of student to the multifamily bond program.
    • Allow the use of multifamily bonds to finance single-room occupancy dwellings.

  • Provide in any future codification of the economic substance doctrine that economic benefits include tax credits.

  • Fix annual Housing Tax Credit percentages at 4 and 9 percent.

  • Specifically provide that rental assistance payments, operating subsidies, interest subsidies and other ongoing payments to a housing property designed to reduce cash flow needs from rent to enable the property to be rented to low-income tenants should not be considered federal grants.

  • Exclude military basic housing allowance from income eligibility calculations.

  • Revise the definition of eligible basis to provide that eligible basis includes reductions in basis arising by reason of historic rehabilitation tax credits, energy credits or other Section 38 credits.

Flexibility

  • Rename the Low-Income Housing Tax Credit program the Affordable Housing Tax Credit program.

  • Modify the income qualification requirements so that properties may make units available to individuals with incomes greater than 60 percent area median income (AMI) (e.g. up to 80 percent AMI) provided they offset those increases with units targeted at deeper income limits so that the overall average of the property remains 60 percent AMI or 50 percent AMI.

  • Allow that a state may provide, at its discretion, preferences for ?first responders? and ?teachers? if such housing preferences do not violate the general public use requirement or other fair housing laws.

  • Allow a 30 percent increase in eligible basis for properties that meet state-specified geographic or income targeting requirements.

  • Expand the allowable basis for community service facilities from 10 percent to allow this provision to work better in smaller properties. Proposal would allow 20 percent of first $5 million of eligible basis and 10 percent thereafter.

Efficiency

  • Eliminate the Housing Tax Credit recapture bond requirement and replace it with a reporting requirement.

  • Make the 10 percent test requirement, once met and the development is placed in service, incontestable. Once a building is actually placed in service, its allocation should not be subject to challenge on the question of whether it properly satisfied the 10 percent test.

  • Exempt Housing Tax Credit investments from the alternative minimum tax (AMT).

  • Exempt Housing Bond Investments from the AMT.

Preservation

  • Allow Housing Tax Credits to continue for a property suffering from a casualty, provided that it is rebuilt within a reasonable period of time. At present, the IRS will allow Housing Tax Credits to continue for properties suffering casualties that have occurred in presidentially declared disaster areas, but not casualties resulting from other causes. This distinction makes little sense; under this proposal, the current rule applied for disaster areas would be applied in all casualty situations.

  • Eliminate the restriction on the use of Housing Tax Credits for Section 8 Moderate Rehabilitation properties.

  • Repeal the ten year rule for acquisition Housing Tax Credits (this rule prevents taking acquisition Housing Tax Credits if the property has been placed in service or sold within the prior ten year period). This rule was initially enacted in 1986 to prevent developers from taking Housing Tax Credits on properties that had benefited from the generous depreciation rules that had been passed in 1981. This rule has now become an anachronism.

  • Change the related party rules for acquisition Credits. Current law prohibits transfers of properties where there is more than a 10 percent common interest between seller and buyer. The unusually low 10 percent relationship threshold should be increased to 50 percent to conform the Housing Tax Credit program with the general rule in the Code.

Other

  • Rent/Income adjustments for Low Income Housing Tax Credit properties.