Novogradac & Company Llp

Twinning or sidecar financing that pairs the federal historic rehabilitation tax credit (HTC) with other tax incentives can be a crucial strategy to finance the renovation and redevelopment of some the nation's historic buildings. In the latest episode of the Tax Credit Tuesday podcast, host Michael Novogradac, CPA, and guest Michael Kressig, CPA, discuss some of the benefits and hurdles that come with blending federal HTCs with other tax incentives such as the low-income housing tax credit (LIHTC), new markets tax credit (NMTC), opportunity zone (OZ) incentive, renewable energy tax credits (RETC) and state HTCs. Novogradac and Kressig discuss how often each of the various incentives is used in combination with the federal HTC as well as how often Kressig sees transactions with three or more of the subsidies.

Localities'whether cities, townships or counties'are crucial "partners" in low-income housing tax credit (LIHTC) transactions. While not an actual member of the partnership, localities play a major role in the ability to fund affordable housing properties. In this week's episode of Tax Credit Tuesday, Michael Novogradac, CPA, and Mark Shelburne, a housing policy consultant at Novogradac, discuss the roles localities play in LIHTC-financed housing, both for them and for the developers who work with them. They begin by discussing the various ways localities are involved in those transactions, then discuss how they play a role in funding the property, including what to avoid. After that, Novogradac and Shelburne examine nonfinancial ways that localities can help and the role of localities in helping properties meet timelines and deadlines.

Two important financing options when building affordable housing are 4% and 9% low-income housing tax credits (LIHTCs). In the latest episode of the Tax Credit Tuesday podcast, host Michael Novogradac, CPA, and guest Charlie Rhuda, CPA, discuss developers that chose to combine the incentives in a single development, sometimes called "sidecar financing" due to the nature of the financing structure. They provide an overview of the difference between the financing tools and discuss why affordable housing professionals would combine them. Later, Rhuda identifies four types of challenges that can arise for those using the sidecar financing model to develop affordable housing.

Michael Novogradac, CPA, and Tony Grappone, CPA, dive deep into the latest trends in renewable energy tax credit (RETC) financing. In this episode of Tax Credit Tuesday, they discuss the most common structures from 2024, including partnership flips, T flips, and inverted leases and their popularity in the market. They also cover the types of projects funded, like solar and battery storage, investor types (direct vs. syndicated) and pricing trends. They share insights from analyzing over 50 deals worth $12 billion in CapEx and $4.6 billion in tax equity investment. Additional topics include technology-neutral tax credits post-Inflation Reduction Act (IRA), metrics for evaluating investments and future market expectations.

Legislation to modernize and renew the opportunity zones (OZ) incentive in 2025 is essential to its long-term prospects. In this episode of Tax Credit Tuesday, Michael Novogradac, CPA, and Jason Watkins, CPA, discuss the path forward for OZs under potential tax law changes. They discuss the political outlook and priorities under a Republican Party that holds the White House, Senate and House. They discuss the push for an extension to the incentive. Later, Novogradac and Watkins discuss modernization and statutory proposals for OZs, including reporting requirements, investment in rural OZs and reinvesting gains in new businesses. Finally, they talk about how the outlook for permanency for the incentive might look.

The 2025 application period for affordable housing properties to receive a 20% "adder" to the 30% investment tax credit (ITC) for solar power opened in January. In this week's Tax Credit Tuesday podcast, Michael Novogradac, CPA, and Novogradac partner Dirk Wallace, CPA, discuss the use of solar-generated electricity at affordable housing properties, including how to evaluate whether solar works at your property, how President Donald Trump's executive orders affect the awarding of bonus credit percentage, how to apply for the "adder" and what properties are eligible. They also discuss the demand for the "adders" and how to demonstrate benefits to tenants.

After chatter about budget cuts during the campaign from several members of President Donald Trump's new administration, stakeholders in the affordable housing community watch attentively as developments arise in Washington, D.C. In this episode of Tax Credit Tuesday, Michael Novogradac, CPA; Rich Larsen, CPA; and Peter Lawrence, Novogradac's director of public policy and government relations, look at what may be in store for affordable housing through the prism of the U.S. Department of Housing and Urban Development (HUD). First, the trio discusses what might be ahead under Scott Turner, Trump's nominee for HUD secretary. Next, Lawrence and Larsen explore what some of the potential upsides for HUD might be under the new administration. Later, Larsen details challenges that may be on the horizon and how public housing authorities can act now to navigate possible shortfalls.

With a major federal tax bill anticipated in 2025 and a newly seated Congress, Michael Novogradac, CPA, and Novogradac Director of Public Policy and Government Relations Peter Lawrence look ahead to four new federal tax incentives that could be introduced in 2025. In addition to discussing each of the four proposed incentives'the preservation tax incentive, Neighborhood Homes Tax Credit, Workforce Housing Tax Credit and Office Conversion Tax Credit'Lawrence provides insight into which members of Congress may sponsor each of the various bills as well as what the legislative path forward for each looks like.

Rental income and operating expenses both set records and increased at rates higher than the consumer price index for housing in 2023, according to data in the 2024 Novogradac Operating Income and Expenses Report. In this week's podcast, Michael Novogradac and report author Kelly Gorman, a partner in Novogradac's Clark, New Jersey, office, discuss the findings of the report and what affordable housing operators should learn from them. They look at the overall increases, then drill down on specifics about property insurance, repairs and maintenance and utility expenses, including what caused increases and whether trends were likely to continue in 2024 and 2025. They also look at the effect of U.S. Department of Housing and Urban Development (HUD) rent and income limits and discuss expense categories that vary depending on geography.

Michael Novogradac, CPA, and Tony Grappone, CPA, continue their discussion on the top 10 tax issues renewable energy developers and investors should address with their tax accountants with this follow-up to the Dec. 17, 2024, episode. In Part 2, they cover the next five critical topics: assessing positive taxable income, ownership flips, revisiting cash waterfalls, tax credit recapture events and ownership changes during the year. This episode provides essential insights for managing the operational and disposition phases of clean energy projects, ensuring compliance and optimizing tax strategies.

Michael Novogradac, CPA, and Tony Grappone, CPA, discuss essential topics for renewable energy developers and investors to address with their tax preparers. They cover the first five of 10 key issues for renewable energy developments: placed-in-service date determination, tax depreciation conventions, comparing financial projections with actual results, whether a deficit restoration obligation is in place, and state and local tax considerations. This episode emphasizes the importance of preparing for a smooth tax season and avoiding costly pitfalls, providing valuable insights for both new and seasoned professionals in the renewable energy sector.

As 2024 nears its conclusion, Michael Novogradac, CPA, interviews Christina Apostolidis, CPA, to discuss year-end financial reassessments for affordable housing professionals. The episode of Novogradac's Tax Credit Tuesday podcast focuses on comparing actual performance to projected tax credit delivery. Novogradac and Apostolidis highlight three key areas to revisit: placed-in-service dates, lease-up status and updating expected eligible basis, all crucial for maximizing tax credits. Apostolidis, who will chair the Novogradac 2025 Affordable Housing Developers Conference in Florida next month, offers insights on managing these components effectively as the year ends. The episode is part of the "So You Want to Be a LIHTC Developer" series aimed at educating those in affordable rental housing finance.

The Community Development Financial Institutions (CDFI) Fund opened the calendar year 2024-2025 new markets tax credit (NMTC) application period Nov. 19, beginning a process that will result in a record $10 billion in NMTC allocation authority next year.' In this week's Tax Credit Tuesday podcast, guest host Brad Elphick, CPA, and Novogradac partner Rebecca Darling, CPA, discuss the application timing and what to expect in the record allocation round. They begin by discussing how the application works and is scored, then look at various deadlines before turning to changes in this year's application. After that, they talk about how a $10 billion round will be different, including a rapid-fire, six-question back-and-forth, before finally looking at what community development entities (CDEs) and the businesses that receive NMTC financing should be doing now.

Michael Novogradac, CPA, and Novogradac partner Tony Grappone, CPA, examine the complexities of year-end financial statement audits for renewable energy companies. They outline critical steps to ensure a seamless audit process, including the review of prior audits, identification of common errors to avoid and management of non-recurring items. Additionally, they provide guidance on proportional amortization accounting for new investors and emphasize important financial reporting deadlines for developers. This discussion is particularly beneficial for renewable energy accountants preparing for the forthcoming year.

An apparent sweep by Republicans of the White House and both chambers of Congress in the Nov. 5 election has major implications for community development tax incentives such as the low-income housing tax credit (LIHTC), new markets tax credit (NMTC), historic tax credit (HTC), renewable energy tax credits (RETCs) and the opportunity zones (OZ) incentive. In this week's Tax Credit Tuesday podcast, Michael Novogradac, CPA, and Peter Lawrence, Novogradac's director of public policy and government relations, discuss the election's outcome and preview what to expect in coming months. They begin by looking at the chances for community development tax incentives to be included in year-end legislation, then examine who will lead tax-writing committees in the next Congress before moving on to the reasons and chances for the "Super Bowl of taxes." After that, they examine the outlook for various tax incentives in tax legislation. Novogradac and Lawrence will co-host a special webinar on the election results Nov. 19.

Financial forecasts are essential for every affordable housing developer to anticipate expenses, cash flow and access to capital to build or redevelop properties, including developments built using low-income housing tax credit (LIHTC) equity. In the latest installment of the Novogradac Tax Credit Tuesday podcast's recurring "So You Want to Be a LIHTC Developer" series, Michael Novogradac, CPA, and Miao Xue, CPA, delve into six ways that developers can enhance the benefits of financial forecasts. Novogradac and Xue introduce credit adjusters and twinning LIHTCs with renewable energy investment tax credits (ITCs) as well as digging deeper into four areas'development budget and eligible basis schedule, sources and uses and 15-year cash flow waterfall, the taxable income and loss schedule, and income and loss allocations and the Section 704(b) capital schedule'covered in a previous financial forecast-focused installment of "So You Want to Be a LIHTC Developer."

Michael Novogradac, CPA, and Novogradac director of multifamily property compliance Stephanie Naquin discuss pressing issues in low-income housing tax credit property (LIHTC) compliance. The discussion covers four key topics: the average income set-aside test (AIT) and its implementation challenges and solutions; the Housing Opportunity Through Modernization Act (HOTMA) and its compliance implications; handling casualty losses at housing credit properties, with a focus on presidentially declared disaster areas; and a comprehensive end-of-year compliance checklist for property owners to avoid non-compliance.

Two of the three major factors that determine fiscal year (FY) 2025 rent and income limits for low-income housing tax credit (LIHTC)-financed properties were recently released, giving a preview of what to expect when those limits are announced next April by the U.S. Department of Housing and Urban Development (HUD). In this week's Tax Credit Tuesday podcast, Michael Novogradac, CPA, and Novogradac partner Thomas Stagg, CPA, discuss those income limits, including what factors are involved in the calculation, what we know so far, how having a good estimate can assist developers and property managers and how HUD's projections for 2023 national median household income lined up with the data from 2023. They also discuss what's new with fair market rents, California's recently passed rent control legislation and which dates to remember between now and the release of FY 2025 income limits.

The deadline to defer capital gains by investing in a qualified opportunity fund (QOF) is Dec. 31, 2026. In this week's episode of Tax Credit Tuesday, host and Novogradac managing partner, Michael Novogradac, CPA is joined by Novogradac partner Jason Watkins, CPA , to discuss the looming deadline, its ramifications and what the possibilities look like for renewal and extension of the opportunity zones (OZ) incentive. They discuss possible passage in the "Super Bowl of Tax" in 2025, how different election outcomes could shape the path forward for the incentive and which representatives could sponsor the legislation. They discuss the possible of a change in the capital gains tax rate. They conclude by discussing ways members of the OZ incentive community can get engaged to push for renewal and extension. Additionally, Novogradac also celebrates the 35th'anniversary of the company founded Oct. 17, 1989.

The Community Development Financial Institutions (CDFI) Fund announced in September awardees for the calendar year (CY) 2023 round of new markets tax credit (NMTC) allocation, providing $5 billion in allocation authority to 104 community development entities (CDEs). In this week's podcast, Michael Novogradac, CPA, is joined by Novogradac partners Rebecca Darling, CPA, and Brad Elphick, CPA, to talk about the awards and the upcoming combined $10 billion CY 2024-2025 round. They discuss high-level takeaways from the awards, including a record low number of first-time awardees, then look at what CDEs and low-income community businesses should be doing before turning to the timing of the combined round and the need for CDEs to be certified by the CDFI Fund.