State & City tax credits for rehabs

Rehabbing, Fix and Flip, Rental Properties
1

Does anyone have any experience rehabbing a buildling residential, commercial, commercial/residential where state & city tax credits were available?

Could you please give your opinions and experiences using or trying to use?

How specifically does the process work?

I’ve just begun doing some reading on this today and thought I would consult this forum to find out peoples experiences.

Thanks

2

There are alot of different programs out there.
They tend to be property specific or location specific.

Wachovia has programs for properties that fall in low-moderate income census tracts where they can help arrange tax credits to help with financing.

Areas like the five boroughs of new york have programs where you can receive property tax credits, or even abatements if you build afforable housing. Upon getting your certificate of occupancy they issue the credits.

Check with your local gov and also HUD. They have some pretty good links.

Good luck,

Craig

3

Thanks

So for the tax credit what will happen is you might have a reduced tax bill that you’ll have to pay versus regular taxes per month/year

and

if you undertake a rehab up to whatever minimum required by the state/city government you may be credited a certain percentage back ?

4

Different programs have different rules.
There is a difference between things tax credits and tax abatements.

Some credit programs run with the land and can be transferred with the property. In some ways, they can actually add value to a property, because, in effect, they decrease the expense ratio. Those credits are usually issued with a particular planned property usage. If you have affordable home credits for use in a multifamily apartment building but sell the property to an investor who plans to build a hotel, those credits probably will no longer be valid. At the very least, they’d have to re-apply.

Abatements are forgiveness for all or a portion of the property tax liability of a property. These are usually given out by local municipalities that assess taxes in the area of the property. For example, we helped a developer obtain tax abatement from the local government on a private prison they were building in the midwest. The state could not afford to build the prison, the client stepped in with an investment group and made the development possible. It served a municipal need and they were issued abatements for 15 years worth of taxes.