Hey everyone,
I was just curious if anyone had any suggestions for lower income/tax credit program seminars? I am looking to go to a basic seminar from Novogradac Company sometime soon. I was hoping to see if anyone has been to these courses and what they think of them? Can anyone suggest any other companies that they have liked???
Thanks Everyone
I have never heard of this company and did not know that anyone was conducting a seminar on low income housing tax credit programs.
From what I know about the programs that I have investigated, the programs are usually setup as limited partnerships and have registered their project with the IRS as a low income housing tax credit program. The general partner either builds or acquires multi-unit housing complexes and operates them as rental properties for 30 years or so. The partnership reserves a percentage of the rental properties for low income housing applicants and receives a tax credit which is distrubuted to all the limited partners.
I am guessing that the seminar you are planning to attend is geared to potential investors who may benefit from the tax credits the program offers if they invest as limited partners.
As a limited partner, you purchase 'units" of the partnership which may have no resale value in a secondary market. More often than not there is no secondary market for your units.
During your holding period, you never receive income from the property, but receive a tax credit that you can claim on your tax return provided you have some other passive income generator that you can use to offset the credit. If you have no other passive income investments, your tax credit might have to be suspended and carried forward to the next year when they might be used.
The general partner has to operate the property for a certain number of years (probably 30) before the property can be liquidated and the limited partners paid a share of the sale proceeds. The sale proceeds will be a taxable capital gain.
Before you wll be allowed to invest in the program, you may have to be qualified as an accredited investor. The requirements may be something like $100K annual income or $500K net worth. You will be asked to make a lump sum payment for each unit you purchase, or the partnership may offer to let you buy on the installment plan. The installment plan will still be an annual lump sum payment over a few years (perhaps four) and you will pay a “financing” surcharge as well.
Back in the mid-90s, the tax credits were paid out over 15 years. The credits added up to more than 100% of the limited partner’s invested principal (one I looked at paid 140%). Congress changed the rules for new partnerships since then and now the partnership has to operate for 30 years, The annual tax credit loses a lot of its investment advantage when received over 30 years.
This sort of program may appeal to high income earners who have a large tax liability every year. In later years, when your tax liability goes down, you may not be able to use some or all of the low income housing tax credit and it just gets carried forward.