AFFORDABLE HOUSING FINANCE
By Donna Kimura
The specter of tax reform hangs over the low-income housing tax credit (LIHTC) market, threatening a slowdown in affordable housing production this year.
Even though tax reform may be a year or more away, it’s already triggered major shifts in the industry as LIHTC investors have pulled back since the November election, caused housing credit pricing to fall.
With Donald Trump in the White House and Republicans in control of the House and Senate, the prospects of tax reform have shot up significantly. Trump has called for slashing the business tax rate from 35% to 15% while members of Congress will likely be eyeing a rate in the 20% to 25% range.
“Within a two-week period (after the election), the LIHTC market experienced the most dramatic change this industry has ever seen,” says Mark McDaniel, president and CEO of Cinnaire. “Investors reacted immediately to the possibility of tax reform that would result in significantly lower corporate tax rates.”