Legislation (HR 4109) has been introduced in the House of Representatives that would allow Low-Income Housing Tax Credits (LIHTC) to be “carried back” five years in an effort to stimulate demand for tax credits.
Demand for tax credits has plummeted as a result of the recession. By allowing the credit to be used to offset prior tax liabilities over five years, instead of one year as under current law, the carryback proposal would allow investors to immediately realize value in LIHTC investments by applying unused credits to prior years' tax liability. Such a change would make LIHTCs attractive to a larger pool of investors.
NAA/NMHC and a broad coalition of organizations have pushed for the carryback proposal as one of three critical steps required to bolster the struggling LIHTC program. We continue to tell Congress that all three of the elements are critical to achieving recovery in the LIHTC program.
Ernst & Young released a report in October that examines the state of the LIHTC market and analyzes a number of proposed solutions for the LIHTC funding crisis. The full report is available at http://bit.ly/6fYWCi.
The Federal Reserve has also published a collection of six articles entitled Innovative Ideas for Revitalizing the LIHTC Market. It is available at http://bit.ly/47fl8i.