Novogradac & Company Llp

The coming year is set up to be a significant one for regulatory guidance and community development tax incentives. In this week's podcast, Michael Novogradac, CPA, and Peter Lawrence, Novogradac's director of public policy and government relations, discuss the coming year and look at the key issues for Novogradac's seven tax incentive working groups. They look at the key emphasis for each group and discuss the value of being part of the working groups. They wrap up with a look at some crosscutting provisions that affect multiple community development tax incentives.

The U.S. Department of Housing and Urban Development (HUD) recently announced it would use 2021 American Community Survey data to determine fiscal year (FY) 2023 income limits, which are used to determine who can live in properties financed with low-income housing tax credits (LIHTCs). In this week's episode of Tax Credit Tuesday, Michael Novogradac, CPA, and Thomas Stagg, CPA, parse several types of information following the announcement: What stakeholders working in LIHTCs and community development know at this stage in the annual process of determining income limits, what they know they don't know and also how to best prepare for unknown challenges on the horizon.

The Community Development Financial Institutions (CDFI) Fund is authorized to award up to $5 billion in new markets tax credit (NMTC) allocation authority under the calendar year 2022 round. Michael Novogradac, CPA, and Nicolo Pinoli, CPA, discuss five ways community development entities can strengthen their allocation applications in preparation for the Jan. 26, 2023, deadline for the calendar year 2022 round. They discuss how the NMTC application is structured, scored and reviewed. They also review tips on which application sections to prioritize in terms of scoring and how to avoid common errors.

In this week's installment of the "So You Want to Be a LIHTC Developer" series, Michael Novogradac, CPA, is joined by Novogradac partner Christina Apostolidis, CPA to discuss keys to successfully meeting tax, audit and investor deadlines for low-income housing tax credit (LIHTC) properties. They discuss the tax and audit requirements, then look at the importance of hiring an experienced tax credit accountant, establishing the timeline and communication protocol, being ready for surprises and how to recap after busy season.

In this installment of the "So You Want to be a LIHTC Developer" series, Michael Novogradac, CPA, is joined by Novogradac partner Blair Kincer and Novogradac principal Kelly Gorman to discuss the annual Novogradac LIHTC operating expenses and income report. They discuss overall impressions from the report, which includes a survey of nearly 125,000 units financed by the low-income housing tax credit (LIHTC), then they look at factors for income in 2021, followed by a look at the increase in property insurance and repairs and maintenance expenses and the drop in payroll expenses in 2021.

In this installment of the "So You Want to Be a LIHTC Developer" series, Michael Novogradac, CPA, and guests Warren Sebra, CPA, discuss final cost certifications, one of the necessary benchmarks for receiving low-income housing tax credit (LIHTC) equity. They discuss cost certification basics, examples of eligible costs, ways to enhance eligible basis and tips and recommended practices for LIHTC developers.

An expected red-wave election for Republicans in the Senate and the House of Representatives ended up being closer than expected, with the Democratic Party retaining control of the Senate and the House of Representatives undecided (although trending toward Republican control). In this week's podcast, Michael Novogradac, CPA, and Peter Lawrence, Novogradac's director of public policy and government policy, discuss the results and the repercussions for community development tax incentives. They begin with an overview of the election, the look at potential leadership for each party in each chamber of Congress, including the key tax-writing committees. Then they discuss the effect the election results will have on the lame-duck session of Congress as well as the next two years, before looking at the 2024 election and 2025 expiration date for many tax incentives. Finally, they discuss the Novogradac working groups and how listeners can benefit from being a part of them.

The CDFI Fund late last month announced the calendar year 2021 (CY 2021) new markets tax credit (NMTC) allocation awards, allocating $5 billion in NMTC authority to 107 community development entities (CDEs). In this week's podcast, Michael Novogradac, CPA, is joined by Brad Elphick, CPA, and Rebecca Darling, CPA, to discuss what we learned from the awards announcement, as well as what CDEs should be doing now that the awards have been announced. After that, they examine what qualified businesses should be doing as they seek below-market-rate financing through the NMTC and wrap up with a look at what to expect for the CY 2022 application round.

Novogradac Tax Credit Tuesday is launching its "So You Want to Be a LIHTC Developer" series, which is meant to be a useful guide to executing a successful low-income housing tax credit development. In this week's episode, Michael Novogradac, CPA, and guests Jeff Nishita, CPA, and Melissa Chung, CPA, discuss assessing the financial feasibility of a proposed LIHTC development or redevelopment, including location and market considerations. They discuss the benefit of properties in qualified census tracts and difficult development areas, gross rents and utility allowances, as well as LIHTC market studies.

The Inflation Reduction Act has $369 billion in clean energy and renewable energy provisions, including the allowance of certain energy tax credits to be separately transferred, the allowance of qualified tax-exempt entities to elect to get a refund of certain tax credits in lieu of syndicating them and the extension of certain tax credits. The Novogradac Renewable Energy Tax Credit Working Group is working with stakeholder members to submit comments to Treasury and the Internal Revenue Service with respect to the Inflation Reduction Act. Michael Novogradac, CPA, and Novogradac partner Tony Grappone, CPA, discuss key provisions of the Inflation Reduction Act that are drawing the most attention from the renewable energy community and how to provide input on the Novogradac Renewable Energy Tax Credit Working Group's comment letter.

Over the past decade, public housing authorities (PHAs) have converted 1,558 projects, including 206,181 housing units, under the U.S. Department of Housing and Urban Development's Rental Assistance Demonstration (RAD) program, representing more than $14.9 billion of in affordable housing. Michael Novogradac, CPA, and Novogradac partner Rich Larsen, CPA, discuss what PHAs and their RAD consultants need to know about RAD accounting issues, compliance issues, financial reporting and other hot topics.

The Internal Revenue Service on Oct. 7 issued final and temporary regulations for the low-income housing tax credit (LIHTC) average-income set-aside test. Michael Novogradac, CPA, and Novogradac's director of multifamily compliance, Stephanie Naquin, discuss unit designations and the cliff test under the new regulations. They also compare the final regulations with the previously proposed regulations, additional questions raised and applicability dates.

The U.S. Census Bureau recently released 2021 American Community Survey (ACS) data, a key ingredient in determining rent and income limits for affordable housing properties. In this week's Tax Credit Tuesday podcast, Michael Novogradac, CPA, and Novogradac partner Thomas Stagg, discuss the data release and its effect on 2023 and 2024 rent and income limits. They begin by clarifying difficulties with 2023 income limits, then examine why most counties will see increases beyond the national median figure before turning to the 2021 ACS data and what it means for 2024. After that, they discuss the recent fair market rent figures released by the U.S. Department of Housing and Urban Development (HUD) and how they'll affect rent and income limits, before turning to the impact of inflation and what to be watching between now and April 2023, when the next rent and income limits are released by HUD.

Year 15 for low-income housing tax credit properties'the end of the initial compliance period and when the investor partner often has received substantially all its tax benefits'is a crucial period for affordable housing properties. In today's podcast, Michael Novogradac, CPA, and Novogradac partner Kevin Wilson, CPA, discuss the issues that arise and considerations for LIHTC properties at Year 15. They discuss when to start addressing such issues and what to review, then look at the goals of the partners, needs and desires of tenants, physical condition and fiscal condition of the property and the rights of various partners. They wrap up by looking at the options for various partners at Year 15.

The announcement of new markets tax credit (NMTC) allocation awards are expected soon, with the next allocation round opening after that. Well informed and well positioned businesses have a great opportunity to secure NMTC financing, even if they were not originally in a community development entity's pipeline. Michael Novogradac, CPA, and Novogradac partner Matt Meeker, CPA, discuss how to close an NMTC transaction successfully in the current economic climate. They'll cover how rising interest rates, growing inflation and supply chain issues are affecting NMTC transactions. They'll also discuss how to prepare a business for NMTC financing. They'll close with some common challenges faced in closing NMTC transactions and how to address them.

With the upcoming allocation round of the new markets tax credit (NMTC) looming, now is a great time for qualified active low-income community business (QALICBs) to know the important roles in an NMTC transaction as well as potential ways to leverage the sources in their capital stack. In this week's Tax Credit Tuesday podcast, the second of a three-part NMTC series, Michael Novogradac, CPA, and Novogradac partner Amanda Read, CPA, identify and define those important roles, including the Community Development Financial Institutions (CDFI) Fund, community development entities (CDEs), accountants, lawyers and more. Later, they define and discuss how QALICBs can leverage different sources of financing such as "soft money," capital campaign dollars and bank debt to maximize the tax credit financing that they can generate from a CDE.

The new markets tax credit (NMTC) incentive provides $5 billion a year in allocation authority to community development entities (CDEs) to support businesses in low-income communities or those that support low-income people. As a qualified active low-income community business (QALICB), there are standards to meet and competition with which to contend to receive the financing. In this week's podcast, the 750th of Tax Credit Tuesday and the first of a three-part NMTC series, Michael Novogradac, CPA, and Novogradac partner Nicolo Pinoli, CPA, discuss the standards and provide tips for businesses to be more competitive to receive such financing. They examine the big picture of the incentive and go over the qualifications to be a QALICB before looking at the amount of financing available and the competition to receive NMTC financing. After they, they examine what businesses should consider at the start of transaction in which they'd like to receive NMTC financing, share key points in the timeline and discuss at wh

In this week's podcast, Michael Novogradac, CPA, and Novogradac partner Brent Parker, CPA, discuss how the Inflation Reduction Act makes it more affordable to include renewable energy and energy efficiency measures in residential rental real estate. They discuss an extension of the Section 45L new energy efficient home credit, qualification updates under the Section 179D deduction and retroactive extension of the renewable energy investment tax credit.

One week ago, President Joe Biden signed The Inflation Reduction Act into law, legislation that includes major clean and renewable energy provisions, as well as raising a net total tax of about $90 billion over 10 years, according to the Joint Committee on Taxation. In this week's podcast, Michael Novogradac, CPA, is joined by Nat Eng, CPA, and Novogradac's director of public policy and government relations to talk about the provisions of the bill. After giving and overview, they discuss the significant broad and crosscutting provisions of the legislation before diving into the specifics of the clean and renewable energy provisions, including the effect of the increase in credit totals, the direct-pay provisions, transferability and bonus credits. They also discuss provisions that are related to affordable housing and community development.

The U.S. Department of Treasury July 27 announced new frequently asked questions (FAQ) guidance to increase the use of Coronavirus State and Local Fiscal Recovery Funds (SLFRF) to boost the supply of affordable housing. In today's podcast, Michael Novogradac, CPA, and Novogradac partner Dirk Wallace, CPA, examine the guidance and implications for those in affordable housing. They begin by discussing the difficulties with the rule issued earlier this year, then discuss the clearly allowable uses and the ability to use recovery funds as long-term loans for affordable housing. Then they look at the pros and cons of different approaches, outstanding questions about intermediary uses and issues with layering recovery funds into a capital stack. They continue by examining reactions by stakeholders in affordable housing, discussing outstanding issues with the guidance and looking at how to best access recovery funds.