Tax Credit Tuesday Podcasts
Each Tax Credit Tuesday, Novogradac & Company LLP's audio broadcast offers an in-depth weekly look at tax credit topics. A new episode is posted here and on the RSS Feed by 1 p.m. Pacific Time every Tuesday.
Capitol Hill has seen a flurry of legislation introduced this year to strengthen, expand, extend or create tax incentives in affordable housing and community development. The low-income housing tax credit, historic tax credit, new markets tax credit, opportunity zones and more are just some of the incentives that could be affected by recently introduced legislation. In today’s Tax Credit Tuesday, Michael Novogradac, CPA, and Peter Lawrence, Novogradac’s director of public policy and government relations, discuss an overview of each of the bills and the incentives they would impact. Later, they discuss possible vehicles for passage for the various bills as well as steps those in affordable housing and community development can take now to push for the legislation.
Building for-sale affordable housing in economically distressed areas is a challenge that many for-profit and nonprofit developers face and a key hurdle is gaining financial equity. One method is the use of new markets tax credits to finance such housing and in today’s Tax Credit Tuesday, Michael Novogradac, CPA, and Novogradac partner George Barlow, CPA, discuss the issues and opportunities related to such financing. They begin by talking about possible sources for such housing, then discuss the requirements for NMTC-financed for-sale housing, who is involved in this and where it works best. They also discuss how and when to contact a community development entity, significant tax issues and more.
The U.S. Department of Housing and Urban Development (HUD) released 2023 income limits to determine eligibility for low-income housing tax-credit (LIHTC) properties and HUD-assisted programs last week. On this week’s Tax Credit Tuesday, Michael Novogradac, CPA, and Thomas Stagg, CPA, discuss the income limits and the implications for operators of LIHTC properties. They look at the big-picture takeaways, then examine the effects of the cap on properties. After that, they discuss action steps to take now, what we expect for 2024 and what resources are available to those who are interested.
Several upcoming deadlines and changes in low-income housing tax credit (LIHTC) property compliance have wide-ranging implications for developers, owners, investors, property managers and beyond. Michael Novogradac, CPA, and Stephanie Naquin, HCCP, COS, discuss four major issues on the horizon in 2023 in property compliance: the average income set-aside, the implementation of new income and asset rules, new physical inspection protocols and income limits. They cover what listeners need to know on each of these topics as well as providing insights for listeners for key dates and deadlines to keep in mind in the months ahead.
The Community Development Financial Institutions Fund incentivizes community development and economic growth through the new markets tax credit (NMTC). Small business loan funds are one way community development entities (CDEs) can invest in small businesses in amounts up to $4 million. In today’s episode of Tax Credit Tuesday, Michael Novogradac, CPA, and Greg Clements, CPA, discuss the pros and cons of small business loan funds for CDEs, lenders, borrowers and more. They discuss the reasons a CDE might use a loan fund rather than a series of loans as well as strategies for implementing the funds. They also discuss how a CDE might structure loan funds with the ability to make them into evergreen funds.
The Inflation Reduction Act of 2022 allows for the transferability of certain renewable energy tax credits, including the production tax credit (PTC) and the investment tax credit (ITC). As the renewable energy community awaits further guidance from the Internal Revenue Service, Michael Novogradac, CPA, and Josh Morris, CPA, discuss in this week’s podcast the basics of transferability, including how it compares to more traditional renewable energy partnership structures. They discuss possible issues around timing and recapture, as well as anticipated guidance about transferability of renewable energy tax credits.
Federal law generally requires low-income housing tax credit (LIHTC) properties to remain rent restricted and only available to low-income tenants for a minimum of 30 years. This period of required affordability beyond Year 15 is called the extended-use period. Some states extend the affordability period even longer. As more LIHTC properties reach or approach Year 30, Michael Novogradac, CPA, and Novogradac partner Chris Key, CPA, discuss four common options for LIHTC owners at Year 30, including the benefits, considerations and challenges of each.
A growing number of real estate developers are choosing U.S. Department of Housing and Urban Development (HUD)-insured loans: Section 221(d)(4) and Section 223(f). Both programs allow real estate developers to borrow more money at lower interest rates and longer amortization terms, compared to most conventional loans. Michael Novogradac, CPA, and Novogradac partner Tiffany French, CPA, compare and contrast the benefits and requirements of Section 221(d)(4) and Section 223(f) loans with conventional loans.
The Financial Accounting Standards Board released Accounting Standards Update 2023-02, which expanded the ability to use the proportional amortization method of accounting to all tax credits. Michael Novogradac, CPA, and Novogradac partner Brad Elphick, CPA, discuss what the announcement means for multiple types of tax credit investments, including federal low-income housing tax credits, new markets tax credits, historic tax rehabilitation credits and renewable energy tax credits such as the production tax credit and investment tax credit. They discuss how the impacts of proportional amortization can be further expanded and how additional action could spur deeper change.
The Financial Accounting Standards Board (FASB) published Accounting Standards Update (ASU) 2023-02 on March 29, which expands the proportional amortization method to account for investments in all tax credit structures. That accounting method was previously allowed only for low-income housing tax credit (LIHTC) investments, but now is available, by election, to all community development tax credit investment reporting that meet five conditions. Michael Novogradac, CPA, and Novogradac partner Nat Eng, CPA, discuss the implications of ASU 2023-02 for renewable energy investment, including key aspects of the guidance, the hurdles of applying proportional amortization and ways to overcome those hurdles.
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