Low Income Housing Tax Credits for Nonprofit Organizations After Tax Reform

Impact of Changes to Corporate Tax Rates, Business Interest Deduction Limitations, Alternative Depreciation and BEAT

This Program Has Been Cancelled

A live 110-minute CPE webinar with interactive Q&A


Thursday, December 13, 2018

1:00pm-2:50pm EST, 10:00am-11:50am PST

Early Registration Discount Deadline, Friday, November 16, 2018


This CLE webinar will provide nonprofit officers and advisers with a practical guide to the federal low income housing tax credit (LIHTC) program as it applies to exempt organizations in the wake of the 2017 tax reform law. The panel will detail the impact of the changes to depreciation treatment for exempt organizations holding certain real estate property, describe election strategies to minimize the effect on low income housing project investors, and outline other critical changes to the program.

Description

While the 2017 tax reform law left the federal LIHTC intact, many of the law's provisions significantly impacted the treatment of LIHTC investments. Officers and advisers serving nonprofit and tax-exempt organizations will need to grasp the impact of the new tax regime on both current and future LIHTC projects.

Several features of the tax law will likely create impediments to LIHTC investments. The lowering of the corporate tax rate will result in downward pressure on equity pricing for projects, as the value of current tax deductions decreases from a possible maximum of 35% to 20%, which will also increase financing costs for developers to cover the shortfall.

But the most important impact of the new law on LIHTC investments comes from the business interest limitation found in Section 163(j) and the intersection of the limitations with new depreciation rules. The new rules permit depreciation on qualified residential real property over 27.5 years; however, the law also provides for alternative depreciation, which remains at 40 years. Certain partnerships may elect out of the interest limitation rules but in so doing must adopt alternative depreciation approaches on their residential properties, which limits current deductions and may have both a tax and pricing impact on investors.

Listen as our experienced panel provides a practical guide to navigating the impact of the 2017 tax code changes on LIHTC investment projects.

READ MORE

Outline

  1. Financing structures of LIHTC investment projects
    1. Tax-exempt private activity bonds
    2. Low income housing credits
    3. HUD programs
  2. 2017 tax reform law provisions impacting equity pricing
    1. The reduced corporate income tax rate
    2. Change in inflation adjustment to Chained CPI
    3. Repeal of tax exemption for advance pay and tax credit bonds
  3. Alternative depreciation requirements
  4. Section 163(j) business interest deduction limitation
  5. Areas of uncertainty awaiting regulatory guidance

Benefits

The webinar will address these and other important questions:

  • The impact of corporate tax rates and elimination of the corporate AMT on equity pricing for LIHTC project investments
  • What the elimination of the tax exemption for advance pay bonds and tax credit bonds means for LIHTC projects
  • How the BEAT provisions will dissuade some investors from participating in low income housing project investments
  • How the alternative depreciation rules intersect with the Section 163(j) business interest deduction limitation

Faculty

Wallace, Dirk
Dirk Wallace, CPA

Partner
Novogradac & Company

Mr. Wallace has extensive experience in developer consulting and real estate syndication with an emphasis in real...  |  Read More

Additional faculty
to be announced.