Nebraska Adopts a State Low-Income Housing Tax Credit
The Nebraska Legislature has adopted a state low-income housing tax credit to accelerate the development of low-income housing in Nebraska (Laws 2016, LB 884). Nebraska is now one of sixteen states that have a state low-income housing tax credit program.
Based on the federal Low-Income Housing Tax Credit (“LIHTC”) program, the Nebraska program provides an owner of qualified affordable housing projects a nonrefundable tax credit equal to the amount of federal low-income housing tax credits received by the project for a period of six years. A taxpayer may claim the credit against Nebraska income tax, premium tax imposed on insurance companies, or the franchise tax imposed on financial institutions.
An insurance company claiming the credit against the insurance premium tax need not pay any additional retaliatory tax as a result of receiving the credit. And the legislation clarifies the use of the credit is payment of tax for purposes of corporate income tax.
To qualify for the state LIHTC, an owner of an affordable housing project must apply to the Nebraska Investment Finance Authority (“NIFA”) and place the project in service after January 1, 2018. State LIHTC allocations are limited to the amount of the federal low-income tax credits available each year. Federal LIHTC in Nebraska were approximately $4.3 million in 2016.
NIFA may allocate credits to a project up to the amount of the federal low-income tax credits the project received, but only to the extent NIFA determines the credits are necessary to make the project feasible. And the credits are subject to recapture if a portion of any federal LIHTC are recaptured or disallowed within the six-year credit period.
For additional information concerning LB 884, click here. Please do not hesitate to contact us if you have questions about this bill or any others. Thank you.