The White House budget proposal seeks a major increase to the low-income housing tax credit (LIHTC) program.
The fiscal 2024 plan calls for a $28 billion expansion in LIHTCs over 10 years as well as lowering the 50% bond test to 25%.
Under the Biden administration proposal, each state would receive $4.25 per capita in new potential credits for allocation, with a small state minimum of $4,901,620 in 2024. For 2025, the amounts would increase to $4.88 and $5,632,880. For 2026 and subsequent years, the amounts would be the same as the prior year and indexed for inflation.
The latest budget plan also calls for lowering the bond test, a move that’s been a priority for many LIHTC advocates. Under the budget plan, a building would be eligible to earn LIHTCs on the basis of 25% private-activity bond financing of the building and land. This change from 50% would apply to buildings placed in service in taxable years beginning after Dec. 31, 2023.
In addition, President Joe Biden is proposing to repeal the qualified contract provision from the date of enactment. It also seeks to repeal the “right of first refusal” safe harbor and replace it with a purchase option, saying “LIHTC investors have imposed hurdles to the use of ROFRs that allow LIHTC projects to be too easily converted to market-rate housing.”
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