Lower Rates Would Mean Lower Yields for LIHTC

Published by Michael Novogradac on Tuesday, May 28, 2013 - 12:00am

If current corporate tax reform proposals are successful, yields for low-income housing tax credit (LIHTC) investments could decrease significantly, according to the Novogradac & Company report, “Affordable Rental Housing After Tax Reform: Calculating Corporate Tax Reform’s Possible Effects on Equity Raised from Low-Income Housing Tax Credits.”

Based on the scenarios considered in the report, the combined, projected effect of lower corporate tax rates and longer depreciation periods – assuming investors were willing to invest the same amount of capital – could reduce yields for 9 percent volume cap new construction LIHTC investments by 88 to 151 basis points, or more.

Blog Estimated Yield Changes for a 9% Volume Cap New Construction Investment
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In light of the important role that investors play in the success of the LIHTC program, the figures presented in the report represent an opportunity for the affordable housing community to consider what lies ahead for the nation’s primary, and most successful tool for creating and preserving affordable rental housing

To read more of the report’s findings and what they could mean for the future of affordable rental housing, check out “Affordable Rental Housing After Tax Reform.”

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