Trump’s proposed tax overhaul puts affordable housing in jeopardy

Miami /
Mar.March 22, 2017 12:05 PM

From the New York website: President Trump’s proposed tax code changes — which could reduce the corporate tax rate from 35 percent to 15 percent — are slowing down private investment in affordable housing projects.

The affordable housing industry is worth around $10 billion and represents about one-quarter of all new apartment construction in the United States, the Wall Street Journal reported. The industry relies on Low Income Housing Tax Credits for money, which often determines if a project gets completed. However, with a possible tax cut in the cards, offsetting income taxes by funneling money into affordable housing is becoming less and less attractive to investors. In January, The Real Deal highlighted the dangers to the program, which helped finance more than 102,000 low-income housing units in New York State (mostly in New York City) between 2005 and 2014.

Developers told the Journal that tax-credit values are down by 10 to 20 percent since Trump’s election win. Investors have even withdrawn support for some low-income housing that is already underway.

“Some of the deals are just dying,” Stuart Boesky, the chief executive of Pembrook Capital Management, a lender specializing in affordable housing, told the Journal. “Some of the deals are scrambling around looking for gap grants from state and local housing agencies.” Most likely, there will be $1 billion to $1.5 billion less equity investment in affordable housing in 2017, thanks to the reduction the credit’s value, accounting firm Novogradac & Company said.

The tax credit was signed into law in 1986 to spur private investment in affordable housing. Senator Maria Cantwell, a Democrat from Washington, is proposing legislation that would offset the credit’s loss in value by expanding it by 50 percent. [WSJ]Miriam Hall

 

Related Articles

arrow_forward_ios
Donald Trump and the Trump National Doral golf course (Getty, Trump Hotels)

In the rough: Trump’s golf clubs and resorts have lost $315M

In the rough: Trump’s golf clubs and resorts have lost $315M
Donald Trump (Credit: Win McNamee/Getty Images)

Newly uncovered trademarks show Trump’s Cuba real estate aspirations

Newly uncovered trademarks show Trump’s Cuba real estate aspirations
212 Spyglass Lane & Carlos Gavidia (Realtor, Instagram/Carlos_E_Gavidia)

“Trumptilla” organizer sells waterfront Jupiter home for $6M

“Trumptilla” organizer sells waterfront Jupiter home for $6M
President Trump and Mar-a-Lago Club (Credit: Joe Raedle/Getty Images, and Pete Marovich/Getty Images)

Trump faces $1.5M in Palm Beach County property taxes

Trump faces $1.5M in Palm Beach County property taxes
Donald Trump with Trump International Golf Club (Credit: Isaac Brekken/Getty Images and Palm Beach Post)

Trump golf club in West Palm seeks rent relief, citing shutdowns

Trump golf club in West Palm seeks rent relief, citing shutdowns
Rendering of Belmont Village Coral Gables and Baptist Health South Florida CEO Brian L. Keeley

Baptist, Belmont gain approval for luxury senior living in Coral Gables

Baptist, Belmont gain approval for luxury senior living in Coral Gables
9885 Palomino Drive (Credit: Google Maps)

Resort Lifestyle Communities scores $36M construction loan for Lake Worth senior housing project

Resort Lifestyle Communities scores $36M construction loan for Lake Worth senior housing project
5010 Nob Hill Road (Credit: Google Maps)

Sunrise affordable senior housing facility sells for $30M

Sunrise affordable senior housing facility sells for $30M
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...