Wednesday, May 11, 2011
Rehabilitation Tax Credits in Virginia Under Siege
Apparently, a recent court ruling has significantly reduced the effectiveness of rehabilitation tax credits to provide financing for the renovation of historic buildings. Basically, the court ruled that Virginia’s state tax credits were taxable income for partner-investors in a tax credit deal. This is significant because the partnership route is the usual manner that tax credit projects are financed. The link below takes you to a DHR document that explains the problem in detail, but in short, over 40% of the potential equity from the state tax credits are lost to income tax liability. According to the DHR and others interviewed, this will have a devastating effect on the tax credit market and the feasibility of historic rehabilitation projects. Follow the link to read more.
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