LIHTC Tax Credits In exchange for submission to land use restrictions, LIHTC`s multi-family real estate owner receives a number of tax credits that allow dollar reductions for every dollar on their federal income taxes. LIHTC real estate receives tax credits each year for the first 10 years of the contract. Tax credits are paid to the owner only because of his property on eligible property. Tax credits cannot be separated individually from the property, i.e.: You cannot sell tax credits. Since the tax credits remain on the property, an interest in the property can be sold, which results in the buyer receiving the tax credits. Termination of the LURA under LIHTC During the restriction period of the LIHTC program, land use restrictions are maintained, limiting the operation of apartment buildings. The specific length of time for which the restrictions are maintained is indicated in the LURA. The LURA restrictions end in one of three ways: 1) the qualified termination process; 2) by enforcement procedures; 3) by the natural course of the period (30 years or more). Multi-family real estate with a LURA contract or other regulatory contract (HAP contract) that limits rents and/or income is underwritten and treated differently from traditional market real estate. In addition, the terms, costs and interest rates of loans may differ from those of a market-rate property.
Most multi-family lenders deal with real estate with a restrictive agreement under an affordable housing program, in which a special team of professionals specially trained in affordable housing depreciates, processes and enters into loans. 3. The HFA will implement the regulatory agreement and take action against all murderers who violate its provisions. These measures may include a declaration of delay and application to a court for the specific implementation of the agreement. The restrictions imposed by the LRA can be defined by the period of compliance and the extension of the period of use. For example, the compliance period is 15 years and 15 years for the extended use period. The initial 15-year compliance period is imposed by IRS, HUD or other housing authorities, and any additional life extension is imposed by the actions taken by each national housing agency in which the apartment building is located. What is a Land Use Agreement (LURA) A Land Use Restriction Agreement (LURA) subjects multi-family real estate to a land use restriction contract (LURA) in which the owner waives part of his land use rights in exchange for the commitment of future tax credits, restrictions on tenant income, rental restrictions for lower-income tenants and other accessibility restrictions.