IRS Announces Historic Increases for 2025 Tax Credit Multipliers and Small State Minimums

A. J. Johnson Partners with Mid-Atlantic AHMA for December Training on Affordable Housing - December 2024

During December 2024, A. J. Johnson will partner with the MidAtlantic Affordable Housing Management Association for two live webinar training sessions for real estate professionals, particularly those in the affordable multifamily housing field. Following the webinars, AJ will review testable areas and in-person administration of the Housing Credit Certified Professional (HCCP ) exam. The following sessions will be presented: December 10: Intermediate LIHTC Compliance - Designed for more experienced managers, supervisory personnel, investment asset managers, and compliance specialists, this program expands on the information covered in the Basics of Tax Credit Site Management. A more in-depth discussion of income verification issues is included, as well as a discussion of minimum set-aside issues (including the Average Income Minimum Set-Aside), optional fees, and use of common areas. The Available Unit Rule is covered in great detail, as are the requirements for units occupied by students. Attendees will also learn the requirements for setting rents at a tax-credit property. This course contains some practice problems but is more discussion-oriented than the Basic course. A calculator is required for this course. December 11: Advanced LIHTC Compliance - This full-day training is intended for senior management staff, developers, corporate finance officers, and others involved in decision-making concerning how LIHTC deals are structured. This training covers complex issues such as eligible and qualified basis, applicable fraction, credit calculation (including first-year calculation), placed-in-service issues, rehab projects, tax-exempt bonds, projects with HOME funds, Next Available Unit Rule, employee units, mixed-income properties, the Average Income Minimum Set-Aside, vacant unit rule, and dealing effectively with State Agencies. Individuals who take both training days will be provided with study materials and a practice exam to assist in preparation for the HCCP exam, which will be administered on December 12. December 12: Review of testable areas and administration of the Housing Credit Certified Professional (HCCP ) exam (In-person exam in Richmond, VA). After two days of intensive and comprehensive LIHTC training, AJ will review program requirements and administer the HCCP exam in person. These sessions are part of the year-long collaboration between A. J. Johnson and MidAtlantic AHMA and is designed to provide affordable housing professionals with the knowledge needed to effectively manage the complex requirements of the various agencies overseeing these programs. Persons interested in any (or all) training sessions may register by visiting either www.ajjcs.net or https://www.mid-atlanticahma.org.

Impact of the Election on Affordable Rental Housing Production

While it is too early to predict with any certainty what the election of Donald Trump will mean for the affordable housing industry, we can make some assumptions based on the policy positions he has outlined so far. Trump s election will likely significantly influence the development of affordable rental housing in the United States. His administration s policies will likely focus on deregulation, immigration control, and using federal lands for housing development. Deregulation and Housing Development Trump has consistently advocated for reducing regulatory barriers to stimulate housing construction. He argues that excessive regulations increase construction costs and impede affordable housing development. By streamlining permitting procedures and relaxing zoning laws, the administration will encourage private developers to build more housing units, potentially increasing the supply of affordable rentals. Immigration Policies and Housing Demand The administration has linked housing affordability issues to immigration, suggesting that reducing the number of immigrants will decrease housing demand and, consequently, lower prices. This perspective claims that mass deportations could free up housing units, making them more accessible and affordable for American citizens. However, such measures may disrupt the construction industry, which relies heavily on immigrant labor, potentially exacerbating housing shortages and increasing costs. Utilization of Federal Lands Trump has proposed opening federal lands for large-scale housing construction, aiming to address housing shortages by increasing the availability of land for development. This initiative would create zones with reduced taxes and regulations to incentivize builders to develop affordable housing projects. While this approach could expand the housing supply, its effectiveness would depend on the implementation details and the willingness of developers to participate. Potential Challenges While the goal of these policies would be to increase the supply of affordable rental housing, they are likely to face several challenges: Labor Shortages: Immigration restrictions could lead to labor shortages in the construction industry, slowing housing development and increasing costs. Environmental and Community Concerns: Utilizing federal lands for housing will almost certainly encounter opposition due to environmental concerns and community resistance to large-scale developments. Market Dynamics: Deregulation alone may not ensure affordability. Developers may prioritize higher-end projects for greater profits, leaving a gap in affordable rental options. In summary, the incoming Trump administration s affordable rental housing development approach focuses on deregulation, immigration control, and leveraging federal lands. While these strategies aim to increase the housing supply and reduce costs, their success will depend on careful implementation and consideration of potential economic and social impacts.

USDA Proposes Mandatory Deed Recording Requirements for Section 538 Rural Rental Housing Program

The Rural Housing Service (RHS) of the U.S. Department of Agriculture has proposed a new rule requiring separate deed restrictions to be recorded for properties financed under the Guaranteed Rural Rental Housing Program (GRRHP). This proposed change aims to ensure affordable housing remains available for low and moderate-income households in rural areas even after mortgages are paid off. Key Changes The proposed rule would amend 7 CFR 3565.352(b) to require: A separate deed restriction must be recorded containing specific restrictive use language. The deed restriction must be recorded before other transaction documentation. The restriction must state that the housing will remain available for low- and moderate-income households for the original loan term. Background Section 538 GRRHP, administered under the Housing Act of 1949, provides loan guarantees for developing housing and related facilities in rural areas. While current regulations require properties to remain affordable for the original loan term, they don't specifically mandate recording a separate deed restriction. This has created a potential loophole: Restrictive use provisions could be released upon loan prepayment if only included in the mortgage or deed of trust. Significance The proposed change addresses a critical preservation issue. Without recorded deed restrictions: Affordable housing requirements could be terminated early through loan prepayment. RHS would have limited ability to enforce continued affordability. Rural communities could lose vital affordable housing resources. Implementation Details The rule would allow three exceptions to the deed restriction requirement if the RHS determines: There is no longer a need for low- and moderate-income housing in the market area; Housing opportunities for low-income households and minorities won't be reduced, or Additional federal assistance won't be needed. Public Comment Period Interested parties can submit comments on the proposed rule through January 6, 2025, via: Federal eRulemaking Portal (regulations.gov) Docket Number: RHS-24-MFH-0016 RIN: 0575-AD34 Contact Information For more information, contact: Tammy DanielsFinance and Loan AnalystMulti-Family Housing Production and Preservation DivisionRural Housing Service, USDAPhone: (202) 720-0021Email: tammy.daniels@usda.gov

IRS Announces Historic Increases for 2025 Tax Credit Multipliers and Small State Minimums

On October 22, 2024, in Revenue Procedure 2024-40, the Internal Revenue Service (IRS) revealed significant increases for key tax credit multipliers and minimum thresholds for 2025, setting historic highs in several areas. These changes impact the Low-Income Housing Tax Credit (LIHTC) and Private Activity Bonds (PABs), vital funding sources for affordable housing and community development projects. Critical Updates for 2025: 9% Tax Credit Multiplier Increase: The per capita multiplier for 9% tax credits will rise to $3.00 in 2025. This adjustment represents a notable increase, providing enhanced opportunities for affordable housing development. Private Activity Bonds Multiplier: The per capita multiplier for PABs will reach $130, a $5 increase from 2024. This marks the highest level recorded, further supporting the financing of essential infrastructure and housing initiatives. Historic Highs in Small State Minimums: Both the per capita multiplier for the 9% credit and PABs are at record levels. The small state minimums will also be unprecedented in 2025, with $3,455,000 set for the 9% credit and $388,780,000 for PABs. LIHTC Rehabilitation Minimum Increase: The minimum rehabilitation cost for the LIHTC will be $8,500 per low-income unit in 2025, reflecting a $200 rise over the previous year. This adjustment helps ensure that housing rehabilitation projects maintain adequate standards for quality and affordability. Effective Date: All updated minimums and multipliers will take effect starting January 1, 2025.