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Thursday, September 29, 2022

Properties financed by equity from the federal historic tax credit (HTC) generated 135,000 jobs and $8 billion in total rehabilitation investment in 2021, according to the Annual Report on the Economic Impact of the Historic Tax Credit for Fiscal Year 2021, released today by Rutgers University and the National Park Service. The jobs total was up 10.6% and the investment total was up 9.5% over the reported 2020 totals. The NPS certified 1,063 completed historic rehabilitation projects in fiscal year 2021 and approved another 1,098 proposed projects. According to the report, 44% of the projects in 2021 were in low- and moderate-income census tracts and 78% were in economically distressed areas. The report states that the HTC has produced more than 3 million jobs since 1979 and has led to an additional $60.7 billion in federal, state and local taxes.

Wednesday, September 28, 2022

Novogradac has resources available for private companies and nonprofits affected by Accounting Standards Codification (ASC) 842, which changed lease accounting standards. The change–which took effect Jan. 1 for fiscal years beginning after Dec. 15, 2021–affects the way certain contracts are accounted for under generally accepted accounting principles, particularly entities that are lessees. Rather than disclosing operating leases in notes to financial statements, but not on balance sheets, the new guidance requires lessees to record a right-of-use asset for the leased asset and a corresponding lease liability equal to the financial obligation over the lease term, as well as new disclosure requirements.

Monday, August 22, 2022

The Financial Accounting Standards Board (FASB) today released an exposure draft of a proposed accounting standards update that would allow the expanded use of the proportional amortization method to account for investments in tax credit structures.

Tuesday, August 16, 2022

President Joe Biden today signed into law the Inflation Reduction Act (IRA), a $750 billion budget reconciliation bill that includes $369 billion in clean and renewable energy provisions that feature extensions of the renewable energy production tax credit (PTC) and investment tax credit (ITC).

Thursday, August 4, 2022

The Pennsylvania Department of Community and Economic Development (PA DCED) Aug. 3 announced $5 million in state historic tax credits (HTCs) awarded to 25 recipients for the fiscal year 2021-2022 round. PA DCED in a blog post estimated the properties will generate $177 million in rehabilitation expenditures. The next awards round will open Oct. 1.

Wednesday, July 13, 2022

Legislation in Rhode Island to require all entities that receive the Rebuild Rhode Island Tax Credit pay prevailing wages to construction workers became law when Gov. Daniel McKee took no action within 10 days after adjournment of the Legislature. H.B. 7985 applies to all applications for that credit, which includes the state historic tax credit (HTC) and a credit for mixed-use developments in opportunity zones (OZs) that support new affordable or workforce housing. The legislation provides for the revocation of Rebuild Rhode Island Tax Credits for a failure to meet the requirements.

Wednesday, July 6, 2022

Legislation signed into law by Delaware Gov. John Carney extends the annual $8 million allocation for state historic tax credits (HTCs) by one year. H. 475 provides the allocation of HTCs through fiscal year 2028. This was the fourth consecutive year the Legislature extended the period of the credits since the annual cap was increased from $6.5 million to $8 million in 2018.

Friday, June 17, 2022

Ohio Gov. Mike DeWine signed legislation this week to temporarily expand and enhance the state’s opportunity zones (OZ) tax credits and temporarily double the state’s annual historic tax credit (HTC) cap. S.B. 225 increases funding for OZ tax credits for investments in qualified opportunity funds (QOFs) that hold all assets in Ohio OZs. That amount goes from $50 million to $75 million for 2022 and 2023 before dropping back to $50 million in 2024 and settling at $25 million annually thereafter. Investors without state tax liability can now transfer the OZ credit. The bill also temporarily increases the state HTC cap from $60 million to $120 million for fiscal years 2023 and 2024 and increases the tax credit percentage for those years from 25% to 35% for any county, township or municipal corporation with a population of less than 300,000.

Tuesday, June 14, 2022

The proposed global minimum tax and its potential effect on community development tax credit equity investments is the subject of this week’s Novogradac Tax Credit Tuesday podcast episode. Michael Novogradac, CPA, and Novogradac partner Brad Elphick, CPA, discuss the proposal and potential approaches to mitigate the damage to tax credit equity investment. They also examine next steps in the proposal and for community development tax credit stakeholders. Novogradac has also published a white paper on the subject called Pillar Two and Tax Credit Equity Investments and is seeking public comment on the paper. Comments may be sent to [email protected]

The weekly Tax Credit Tuesday podcast offers an in-depth discussion of various tax incentive topics with expert guests.

Thursday, June 2, 2022

Ohio legislation that would temporarily expand and enhance the state’s opportunity zones (OZ) tax credits and temporarily double the state’s annual historic tax credit (HTC) cap has passed both houses of the Legislature and is headed for the desk of Gov. Mike DeWine. S.B. 225 would increase funding for the state OZ credits from $50 million to $75 million for 2022 and 2023 before dropping back to $50 million in 2024 and $25 million annually thereafter. Investors without state tax liability could transfer the OZ credit under the new legislation. The bill also would temporarily increase the state HTC cap from $60 million to $120 million for fiscal years 2023 and 2024 and would increase the tax credit percentage for those years from 25% to 35% for any county, township or municipal corporation with a population of less than 300,000.

Wednesday, May 11, 2022

Georgia Gov. Brian Kemp recently signed legislation to extend the sunset date for Georgia’s historic property rehabilitation tax credit (HTC) to Dec. 31, 2027, from the end of this year. H469 boosts the amount of credits for historic homes to $5 million in calendar years 2023 and 2024 before expiring in 2025. From 2023 to 2027, credits are capped at $30 million for structures other than homes.

Tuesday, May 10, 2022

Illinois Gov. J.B. Pritzker signed legislation to institute a $3 million transaction cap for the state historic tax credit (HTC), while retaining the current $15 million annual statewide cap. S.B. 1711 also extends eligibility for the HTC to limited liability companies and provides clarity on how the credits can be granted to a partnership, limited liability partnership taxed as a partnership or other multiple owners of property.

Friday, May 6, 2022

Kansas Gov. Laura Kelly signed legislation Thursday to create a state low-income housing tax credit (LIHTC) for up to the amount of the federal LIHTC award to a property. The legislation also increased the state historic tax credit (HTC) percentages for certain properties. H.B. 2237 would create the state LIHTC effective for tax years beginning Jan. 1, 2023 or after. The state HTC percentage–which is currently 25%–will be increased to 30% of qualified rehabilitation expenditures (QREs) in cities of 9,500 to 50,000 residents and to 40% in cities of less than 9,500 residents. The legislation also creates the Kansas housing investor tax credit, which is a credit of up to $35,000 per unit for single-family homes with an annual cap of $13 million.

Thursday, May 5, 2022

The three major federal bank regulatory agencies today issued a joint notice of proposed rulemaking to strengthen and modernize Community Reinvestment Act (CRA) regulations. The Office of the Comptroller of the Currency (OCC), Board of Governors of the Federal Reserve System (Fed) and Federal Deposit Insurance Corporation (FDIC) jointly issued the proposal, which would be the first significant interagency revision to the CRA since 1995. The proposal would adopt a metrics-based approach to CRA evaluation of retail lending and community development financing that includes public benchmarks. The rule would also clarify eligible CRA activities that are focused on low- and moderate-income, rural and underserved communities, including affordable housing. 

Wednesday, May 4, 2022

Legislation to create a Kansas state low-income housing tax credit (LIHTC) is on the desk of Gov. Laura Kelly. H.B. 2237 would create a Kansas affordable housing tax credit for up to the amount of the federal LIHTC and would apply to tax years beginning Jan. 1, 2023 or later. The legislation would also change the state historic tax credit (HTC) to increase the credit to 30% of qualified rehabilitation expenditures (QREs) in cities of 9,500 to 50,000 residents and 40% of QREs for cities of less than 9,500 residents. The current Kansas HTC is for 25% of QREs, with 30% for nonprofits.

Thursday, April 28, 2022

Maine Gov. Janet Mills signed legislation Wednesday to extend by five years the sunset date of the state historic tax credit (HTC). L.D. 201 changes the sunset date for Maine’s HTC from Dec. 31, 2025, to Dec. 31, 2030. Maine’s state HTC is for 25% of qualified rehabilitation expenditures (QREs) if the property qualifies for the federal HTC. The credit is also available if a taxpayer doesn’t claim the federal credit, but incurs between $50,000 and $250,000 in QREs.

Thursday, April 28, 2022

Legislation to institute a $3 million transaction cap for the Illinois state historic tax credit (HTC) has been sent to the desk of Illinois Gov. J.B. Pritzker. S.B. 1711 would retain the current $15 million annual statewide cap and require the state to prioritize applications. Properties could not receive both the state HTC and the state’s River Edge HTC.

Wednesday, April 27, 2022

The Internal Revenue Service (IRS) published new guidance this month further clarifying costs that can be qualified rehabilitation expenditures (QREs) when using historic tax credits (HTCs). The guidance outlines what generally qualifies as QREs, what qualifies as QREs under certain circumstances and what generally does not qualify. The expanded guidance includes information about costs associated with flood adaptation, as well as solar panels, wind turbines and geothermal systems.

Thursday, April 14, 2022

Legislation introduced today in the Michigan Senate would make historic barns eligible for the state historic tax credit (HTC). S.B. 1008 would define a historic barn as an agricultural structure that was at least partially built before 1945 and is or was used as an agricultural facility or for purposes related to agriculture. The bill would require the state historic preservation office to establish eligibility guidelines within 120 days of the effective date of the bill.

Tuesday, April 5, 2022

West Virginia Gov. Jim Justice signed legislation that eliminates the transaction cap and the annual statewide cap for the state historic tax credit (HTC). H.B. 4568 removes the $10 million transaction cap and $30 million annual statewide cap. The legislation also allows phased rehabilitations for any project completed after July 1, 2022. The bill’s other provisions are effective June 9.