Tax Reform Proposal Would Alter LIHTC, Repeal HTC, ITC and PTC

Ways and Means Chairman Dave Camp, R-Mich., today released a draft tax reform proposal that would repeal the historic rehabilitation tax credit (HTC) and the renewable energy investment tax credit (ITC) and production tax credit (PTC). The draft does not include any reference to the new markets tax credit (NMTC).

The proposal would retain the low-income housing tax credit (LIHTC) in the revised tax code but would make several changes. Under the proposal, state and local housing authorities would allocate qualified basis, rather than tax credits. The proposed annual amount of allocable basis for each state would be equal to $31.20 multiplied by the state’s population, with a minimum annual amount of $36,300,000. In addition, the draft calls for including repealing the 4 percent credit, extending the credit period to 15 years from 10, repealing the increased basis rule for high-cost and difficult development areas, revising the general-public-use requirement to provide occupancy preferences only for individuals with special needs and veterans, and repealing the requirement that states include the energy efficiency and historic nature of the development in their selection criteria.

Novogradac & Company is developing a detailed analysis of the proposal, so stay tuned.