Tax reform is one of the major issues the Trump administrations is looking to tackle this year, which has given a jolt of uncertainty to the low-income housing tax credit (LIHTC) market and is affecting affordable housing deals from coast to coast, writes Brian Coate, a vice president with the financial firm Lancaster Pollard.
As Coate explains, since 1993 corporations have been under the same tax structure, topping out at 35%, which has provided stability in the LIHTC market. That stability no longer exists, however, as there's been no clear indication as to what the corporate tax rate would be under a Trump tax reform plan, although it’s been rumored to be between 15% and 25%.
Such a change would have a dramatic impact on LIHTC pricing, as a majority of credit buyers are large corporations. With lower taxes to pay, they would need less tax credits. Although stabilized today, almost immediately after the election the LIHTC industry saw a $0.20 drop in pricing across all markets and all projects...........Read More
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