Helping out the less fortunate is the job of state governments, and we are starting to see great legislation being put into place such as the LIHTC. The Low Income Housing Tax Credit is a credit that developers can apply for, and help their communities at the very same time.
Developers that are approved for the low income housing tax credit will be receiving their credits over a long time span, commonly ten years. Each year the developer must conform to certain guidelines in order to obtain the tax credit. Making sure housing is available with income restrictions and doing general upkeep of the property is required over the mentioned time span.
Jobs created through the tax credit were estimated to be over 10,000 in one study. Jobs include that of construction workers, painters, plumbers, and other assorted staff required to bring the idea of affordable housing to reality. The economic stimulus the plan provides is vital for getting Missouri out of the economic slump that so many states seem to be in as the federal economy continues to dither.
Rural areas were less popular for developers taking advantage of the tax credit. Metro areas such as Moberly were more popular among developers. Metro areas tend to be a better return on investment for developers, since tenants are more easy to find and in abundance. Metro areas typically have a waiting list so that developers need not spend time looking for them. In time rural projects will become more of a target.
Tax credits for developers are a major motivational tool. Some developers even base their entire operation around the tax credits that they can obtain. Because of the high demand and willingness of investors to start new projects, there is an approval process that limits the amount of projects done each year. Being approved can make or break a deal, so it’s important to check with the laws and make sure you qualify.
Since its creation, the Missouri low income housing tax credit has been a great success. Businesses have been able to break even on costs within a moderate amount of time and under the right circumstances. Families who need assistance in rent to make ends meet. Jobs have been created, the economy has been boosted, and the future is looking bright for this tax credit in particular. Other similar tax credits are now being introduced to expand upon the LIHTC.
Closing Comments
Missouri isn’t the only state with assistance given to developers and families in terms of housing, but it certainly has a great tax credit that should attract developers even outside the state. Get started on applying for the tax credit by talking to a legal aid or accountant.
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