Biden Budget Proposal Includes NMTC Permanence; NHTC and Affordable Housing Provisions

Monday, March 11, 2024 - 2:32PM

President Joe Biden’s fiscal year 2025 budget proposal request, which was posted today, includes provisions to enhance the low-income housing tax credit (LIHTC) and tax-exempt private activity bonds (PABs), establish the neighborhood homes tax credit (NHTC) and make permanent the new markets tax credit (NMTC). The U.S. Department of the Treasury released the annual “Greenbook,” which explains the revenue proposals. The NMTC proposal would make the incentive permanent with a $5 billion annual allocation indexed for inflation after 2026 and would add an allocation priority to favor community development entities (CDEs) that intend to concentrate their qualified low-income community investments (QLICIs) on populations, geographies and/or businesses identified as having significantly deeper levels of economic distress beyond the baseline eligibility requirements for NMTCs.

The NHTC would help cover the gap between the construction cost and sales price for rehabilitated or newly built single-family homes in distressed communities, while the proposals for affordable multifamily rental housing include a $20 billion incentive called the Innovation Fund for Housing Expansion and a proposal to increase the Federal Home Loan Banks’ Affordable Housing Program contributions.

If the affordable housing proposals are enacted, Novogradac estimates the total net addition would be at least 2 million homes constructed or preserved between 2025-2034. Read more about the multifamily affordable rental housing provisions in this Notes from Novogradac blog post.

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