New Markets Tax Credits
for Affordable Housing

The NMTC for Affordable Housing funds stimulates unique ventures in low-income localities

The Affordable Housing New Markets Tax Credit program is a federal subsidization program created to incentivize financial commitments into low-income localities, producing around 25% of project prices in versatile, below market backing that is normally eliminated at the end of the 7-year compliance period.

The Affordable Housing NMTC program encourages financial investments in low-income neighborhoods for economic rejuvenation

NMTC investors make investments in companies identified as Community Development Entities (CDEs) that successively provide loans to businesses in low-income neighborhoods. The objective of the plan is to spark favorable economic revitalization in these regions.

A CBO Financial Subsidiary, Community Development Funding, LLC was among just 66 groups to obtain NMTC allowance in Round 1 in 2003, and among 62 groups to get an allocation in Round 2 - one of only 10 groups to receive both 1st and 2nd round allowances. Ever since, the CBO group has actually gone on to receive even more allocations for our own CDE, and assisted numerous customers with forming CDEs and effectively requesting a direct NMTC allocation award. NMTCs develop benefits to tax credit financiers, businesses that are in need of capital, and state and city government and financial development authorities.

Meaningful factors for NMTC Programs funding for Affordable Housing

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Affordable Housing in a Troubled Neighborhood

A low-income neighborhood is a census section with at least 20% poverty, or one that has a median household earnings that is at or below 80% of the locality's median family income.

Qualifying Affordable Housing New Markets Tax Credit Funding

Investments are made in the kind of equity-like lending to businesses situated in low-income census tracts or ones that primarily serve or mainly use low-income individuals.

This funding typically is applied as "gap funding" for the advancement of commercial, industrial and retail genuine estate jobs (consisting of community centers).

Other NMTC projects may also include for-sale housing designated for moderate-to-low-income families, renewable innovations, and sustainable, ecologically friendly innovations running on a business scale.

How to Gain Access to New Market Tax Credits for Affordable Housing?

There are 2 methods to get access to the program. To fund a single task, you will require to obtain CDEs that presently have an allowance and have a financial investment strategy that complements your service design and geographic place.

If you have a somewhat big job or a pipeline of tasks in need of funding, the very best choice is to form a CDE and use straight for an allotment of NMTCs.

The Requirements Should Be Met by the Borrower to be Accepted for Affordable Housing NMTC Programs?

The borrower needs to be an authorized Active Low-Income neighborhood company (QALICB), which is an organization that satisfies the list below qualifications:

  • The borrower is is a for profit corporation or not-for-profit), or a partnership
  • It proactively conducts any service aside from residential rental, development, sale or licensing of intangibles, golf course, golf club, massage parlor, hot tub center, suntan facility, racetrack, off-sale alcohol
  • Less than 5% of its assets include "antiques" (e.g., antiques, precious jewelry, red wine, etc).
  • Less than 5% of its assets consist of "monetary home" (e.g., stocks, bonds, money besides affordable working capital).
  • 40% of its concrete possessions are situated in a low-income community.
  • 40% of employee services are rendered in a low-income neighborhood.

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Does Your Project Qualify for Low-Cost Financing or New Markets Tax Credits?

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