California has expanded the provisions of its low-income housing tax credit to include:
- more programs under which tenants receive government assistance; and
- property subject to a rent subsidy contract.
Taxpayers use the credit against corporation franchise and income, personal income, and insurance premium tax liabilities. Taxpayers qualify for the credit if they build, rehabilitate, or acquire low-income housing that may be considered “at risk of conversion.” Generally, “at risk of conversion” means a multifamily rental housing development in which at least 50% of the units receives assistance from one of several government programs.
Under new legislation, tenants receive may receive governmental assistance:
- under Section 514 of the Housing Act of 1949 (relating to housing for farm laborers);
- under Section 1484 of Title 42 of the U.S. Code (relating to insurance of loans for housing and related facilities for domestic farm labor); or
- through loans or grants administered by the Department of Housing and Community Development.
Also, “at risk of conversion” property now includes property subject to a rent subsidy contract, provided rent can be prepaid anytime within five years before or after the date the taxpayer applies for the tax credit.
The legislation also incorporates amendments made by Ch. 372 (A.B. 571), Laws 2017.
Ch. 418 (A.B. 1714), Laws 2017, effective January 1, 2018