At Dorfman Capital we assist both developers and investors to receive the maximum benefits available utilizing Federal and State Low Income Housing Tax Credits.
The tax credits provide means by which the developers raise capital, by which investors benefit from investment returns associated with tax savings, and by which underserved urban and rural communities benefit from affordable housing.
As leading experts in the industry, we partner with both developers and investors to facilitate the monetization of tax credits. Having completed hundreds of tax credit transactions we are well equipped to negotiate the best prices and terms for our clients.
Created by the Tax Reform Act of 1986, Internal Revenue code section 42, the LIHTC program provides tax credits for the acquisition, rehabilitation/preservation, or new construction of rental housing targeted to lower-income households. Both for profit and nonprofit developers may apply for the tax credits. Once awarded, these investments may be utilized by corporations to reduce their income and premium tax liabilities.
The Low-Income Housing Tax Credit (LIHTC) is the most important resource for creating affordable housing in the United States today. According to HUD's National Low Income Housing Tax credit (LIHTC) database: 40,502 projects and 2.6 million housing units were placed in service between 1987 and 2013.
LIHTC properties have an average vacancy rate of 4.2 percent, compared to 10.6 percent in the overall rental market. Foreclosures have occurred in less than 1 percent of all LIHTC properties since 1986, better than all other classes of real estate.
Under the federal guidelines, each participating state has its own rules, process and governing structure for the LIHTC program. In Massachusetts, the Department of Housing and Community Development (DHCD) is responsible for allocating awards and overseeing compliance for qualifying projects. We have particular expertise and experience with the MA Low Income Housing Tax Credit which is available annually over a five year stream.