Affordable rental housing
across the state is
getting a boost with
the Wisconsin Housing and
Economic Development
Authority announcing
nearly $50 million in housing
tax credits to developers.
So how do the tax credits
accrue to developers?
This is a great question.
Housing tax credits work
very differently than so many
other kinds of tax credits.
A developer or a community
applies for competitive or
noncompetitive tax credits
and they sell those credits
to an investor.
The investor has the ability to
write down their tax liability
for up to 10 years
depending on the
type of credit
for that amount every year.
So, for instance
a $1 million tax credit award
can generate something like
$9 million in equity
awarded by developers who
will for 10 years write off
a $1 million investment
from their tax liability.
The value of tax credits
to housing is it
makes it possible for
the development of housing that
will be income and
rent restricted, but
still operate in a
sometimes profitable way
but certainly a solvent way.