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Broad Housing Tax Credit Consensus Reached

By David Abromowitz
August 2009
People: David Abromowitz, Julia C. Livingston

The economic downturn and market turmoil have resulted in a continued shortage of investor capital for low income housing tax credit ("LIHTC") financed-housing.  A number of national stakeholders in the LIHTC field have come together to agree on a targeted list of legislative proposals intended to bring capital back into the LIHTC market and otherwise stimulate the creation of affordable rental housing.

The proposals are outlined in the sign-on letter (click here to download), which resulted from a series of meetings convened by David Abromowitz at the request of the Living Cities coalition.  David chaired the meetings on behalf of the Center for American Progress where he is a Senior Fellow.  David is also a Director at Goulston & Storrs.

Over the next couple of months, the groups that have already signed on to these proposals plan to advocate in Congress for the following legislative proposals:

  1. Extension of the Exchange Program:  A one year extension of the Section 1602 LIHTC exchange program (the “Exchange Program”) created under the American Recovery and Reinvestment Act of 2009 (“ARRA”).  Also, expansion of the Exchange Program to include 4 percent LIHTCs that accompany tax-exempt multifamily housing bonds.
  2. Five Year Carry Back:  An increase of the current carry back from one year to five years.  Investors with existing LIHTC-financed housing would be permitted to carry back LIHTCs for up to five years from the returns they file in 2008-2010, but only to the extent they immediately reinvest credit amounts carried back in new affordable rental housing.  Investors with credits generated after 2008 by new LIHTC-financed housing would be permitted to carry back LIHTCs for up to five years as the need arises during the ten year credit period.
  3. Expansion of Investor Base:  Allow certain S corporations, closely held C corporations and limited liability companies with gross receipts in excess of $10 million annually to utilize the LIHTC.

If you would like further information regarding these proposals, please contact any of the attorneys listed below:

David Abromowitz
(617) 574-4016

Julia C. Livingston
(617) 574-4151

This advisory should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own lawyer concerning your situation and any specific legal questions you may have.

Pursuant to IRS Circular 230, please be advised that, this communication is not intended to be, was not written to be and cannot be used by any taxpayer for the purpose of (i) avoiding penalties under U.S. federal tax law or (ii) promoting, marketing or recommending to another taxpayer any transaction or matter addressed herein.

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