2017 Capitalization Rate for Valuing Low-Income Housing Tax Credit Properties
The Rent-Restricted Housing Projects Valuation Committee sets the capitalization rate that county assessors use to value low income housing tax credit (“LIHTC”) projects for property tax purposes. On November 29, 2016, the Committee set the 2017 capitalization rate at 6.5 percent. The 2017 rate is the same as the 2016 rate.
In 2015, the Nebraska Legislature changed the way county assessors value LIHTC projects, requiring assessors to use a market-derived capitalization rate and an LIHTC project’s net operating income. See Laws 2015, LB 356. As a result, although some valuations increased, many LIHTC projects had reduced values and lower property taxes in 2016. Previously, substantial variation existed among various counties’ approaches to valuing LIHTC properties, which led to disputes and potentially disparate treatment.