The Internal Revenue Service (IRS) on Wednesday issued a revenue ruling and a revenue procedure concerning three 4% low-income housing tax credit (LIHTC) situations. Revenue Ruling 2021-20 holds that buildings are not subject to the minimum 4% floor for draw-down bonds issued prior to 2021, a de minimis Section 42(h)(4)(A) obligation issued after Dec. 31, 2020, or a de minimis allocation of LIHTC funds occurring after Dec. 31, 2020. Revenue Procedure 2021-43 clarifies this ruling.
The California Debt Limit Allocation Committee (CDLAC) today released a memorandum with an application deadline for properties in difficult development areas (DDAs) and qualified census tracts (QCTs) that expire in 2021. New DDAs and QCTs will be effective Jan. 1, 2022.
The U.S. House of Representatives today passed the Build Back Better Act, a $1.7 trillion bill that includes an expansion of the low-income housing tax credit (LIHTC), the introduction of the neighborhood homes tax credit (NHTC), an additional tribal allocation of the new markets tax credit (NMTC) and $325 billion in renewable energy tax incentives. H.R. 5376 passed 220-213 and now goes to the Senate. The legislation includes an extension of the 12.5% increase in 9% LIHTC allocations that began in 2018 through 2024, adding a 10% increase, plus an annual inflation adjustment, to that amount. The bill also would reduce the 50% test for affordable rental housing financed with private activity bonds (PABs) to 25% for calendar years 2022-26, establish a 50% basis boost for extremely low-income housing and provides a 30% basis boost for LIHTC properties in tribal areas.
The multiplier for the state per-capita allocation of 9% low-income housing tax credits (LIHTCs) in 2022 will be $2.60 and the private activity bond (PAB) multiplier will remain at $110, based on Revenue Procedure 2021-45, released today by the Internal Revenue Service (IRS). The small-state minimum for LIHTCs will be $2,975,000 and the small-state minimum for PABs will be $335,115,000. The 9% LIHTC figure is a decrease from 2021, the final year of a four-year 12.5% boost in allocation amount (although a provision to extend that boost is included in reconciliation legislation being considered by Congress).
Private activity bond (PAB) issuance for multifamily housing increased to a new record in 2020, according to a report released today by the Council of Development Finance Agencies (CDFA). Issuance of multifamily PABs–which can be combined with 4% low-income housing tax credits (LIHTCs) in multifamily housing–reached $17.2 billion in 2020, up from the previous record of $16.4 billion in 2019. The jump in multifamily PAB issuance comes despite a decrease in overall PAB issuance.