Austin apartment complex plan hits speed bump with new tax law
Travis County staffers warned Tuesday that the federal tax overhaul could stymie efforts to fund a proposed affordable housing project in Austin that largely depended on low-income housing tax credits.
Tax credits are the U.S. government’s primary tool to encourage the development of affordable housing. The government grants the credits to developers, who then sell the credits to banks and other investors, who in turn use those credits to lower their own tax bills.
However, a key change in the recently approved federal tax bill — the corporate tax rate reduction from 35 percent to 21 percent — could put a dent in the developer’s returns from the program, Karen Thigpen, county corporations project and program manager, told the Commissioners Court at its Tuesday meeting.
The lower the tax obligation, after all, the less the credits are worth to investors, she said.
“We do not yet have a precise measure on these declines — both in dollars or in demand,” Thigpen said. “It’s too early to quantify how large of an impact this will have … but we are hearing that it may be as much as 10 cents on the dollar per tax credit, which is a significant decline.”
Read more: http://www.mystatesman.com/news/local/austin-apartment-complex-plan-hits-speed-bump-with-new-tax-law/D5jM5rlPz6df0oagiKwsAK/
