Maine’s New Tax Credit for Affordable Housing
As promised in her State of the State address, Governor Mills this week signed LD 1645, “An Act To Create Affordable Workforce and Senior Housing and Preserve Affordable Rural Housing.”
The law creates the Maine Credit for Affordable Housing, a state-level income tax credit for developers of low income housing, which supporters hope will spur the development of more affordable housing units for low-income and elderly Maine residents, and help to preserve rural housing.
Under the program, up to $10 million of tax credits will be available for allocation annually in 2021 through 2028. The Maine State Housing Authority (MSHA) will administer the allocation of the tax credits to developers of eligible projects (under procedures to be established). Credits not allocated during a calendar year can be carried forward and allocated in subsequent years. The credit is refundable.
The requirements that must be met for projects to qualify for an allocation of credits are complex; they are closely tied to the requirements under the Federal Low Income Housing Credit. In general, a developer that receives a tax credit allocation from the MSHA is allowed a credit equal to the total Federal Low Income Housing Tax Credit or 50% of the basis of the project if the total costs are $100,000 or more and some other requirements are met. Issuance and utilization of the credits are tied to when the property is put in-service.
Annual credit allocations will be targeted: 30% must go to senior housing projects, 20% to the creation of multifamily affordable rental housing in rural areas, and 10% for qualified rural development preservation projects.
Hopefully the potentially significant benefits provided by this new Maine tax credit, combined with the federal incentives, will lead to the development of substantially more low income housing units in Maine, helping to alleviate the current extreme shortage of available housing for Maine’s low-income and senior citizens.
To discuss this tax legislation, please contact Andy Smith or your BNN tax service provider at 800.244.7444.
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