Affordable Housing News & Views - January 2018

Happy New Year, friends and colleagues throughout the affordable housing industry. 

While 2017 finished with enormous activity and change on Capitol Hill, 2018 begins with numerous industries, ours in particular, coming to grips with those changes. As the Tax Cuts and Jobs Act bill became closer to reality, and especially once it did, a number of us at CohnReznick, myself included, started to field a host of questions from clients and friends throughout the industry. All desired to know the same: how does this affect my business, investments, and deals, and how will I need to adjust? 

In that spirit, we are focusing 2018’s first installment of Affordable Housing News & Views solely on those issues. Foregoing the traditional format of the communication, we present four articles (and one from our friends at NCSHA) with diverging focal points to deliver insight on this momentous piece of legislation:

Capitol Connection: Tax Cuts and Jobs Act of 2017 - Affordable Housing Aftermath 

First, Bob Moss reviews the aftermath from H.R. 1’s passage in his latest Capitol Connection. Bob also discusses what’s next for Private Activity Bonds and possible expansion of the 9% credit.

Change in Tax Rates and Qualified Affordable Housing Project Investments 

Next, my colleagues Mike Beck and Gordon Chatterton cover how the change in tax rates will impact accounting for investments in qualified affordable housing projects. Net LIHTC investments will need to be evaluated for impairment and annual accounting, and the amortization of the net investment will be impacted if the proportional amortization method is used. These two areas of consideration are addressed in their article.

Tax Cuts and Jobs Act: State of the Investor Market 

Cindy Fang, from our Tax Credit Investment Services group, discusses the state of the investor market, including the impact of the lower corporate rate BEAT (Base Erosion and Anti-Abuse Tax) and her insights on pricing and overall market activity.

A Q&A ON TAX REFORM

Yours truly has been collecting questions that CohnReznick has been receiving on a number of topics, such as: the impact of new tax law on existing LIHTC deals, deals not yet in service, expensing of personal property, impacts to syndicated funds, how the 30% interest expense limitation works, and more. 

NCSHA Task Force on Recommended Practices in Housing Credit Administration's Final Report 

Lastly, I found NCSHA’s Task Force on Recommended Practices in Housing Credit Administration’s final report valuable and helpful. From NCSHA, “…the Task Force undertook a comprehensive revision of NCSHA’s previous recommended practices to respond to current program challenges and opportunities by updating and expanding both NCSHA’s Recommended Practices in Housing Credit Allocation and Underwriting and its Recommended Practices in Housing Credit Compliance Monitoring. The final report is a consolidation of these two sets of practices, thus covering the breadth of state Housing Credit program administration responsibilities.” 

The long wait for changes to the U.S. tax code is over, and we’re entering a new reality. Hopefully, the material presented above helps to identify areas that require attention, as well as identify where opportunity may exist. As we learn more, we will continue to provide updates and bring light to areas of uncertainty. 

From all of us at CohnReznick, we wish you much success and happiness in 2018. Please reach out to us for any questions or concerns. 

Beth Mullen

CPA, Partner - Affordable Housing Industry Leader

 

This has been prepared for information purposes and general guidance only and does not constitute legal or professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its members, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.