By Darryl Bucher, Senior Managing Consultant, Atlanta
In the 2014 Georgia legislative session, an important bill was passed regarding ad valorem taxation of low-income housing. House Bill 954, fronted by the Georgia Affordable Housing Coalition, was a follow up-to a white paper presented to the Georgia Department of Revenue pertaining specifically to the valuation of Low Income Housing Tax Credit (LIHTC) and other properties that have “rent limitations, operational requirements and any other restrictions imposed upon the property.” The Georgia legislation made several refinements to the property tax code over the last decade or so with the intent of providing guidelines as to how Section 42 LIHTC property should be valued.
Section 42 LIHTC housing came out of the tax reform act of 1986, which was lead by then Housing of Urban Development (HUD) chairman Jack Kemp. The program incentivizes private businesses to own and operate low-income housing in coordination with local housing authorities. By awarding tax credits, it allowed the construction of low-income housing that would not have been built otherwise due to the simple real estate principle of “Economic Feasibility.” The issuance of the tax credits themselves was the only way that any of these rent restricted properties would be “economically feasible” in the first place.
For the full article by Darryl Bucher of Paradigm Tax Group, click here.