U.S. Treasury sets new tax credit rule to expand affordable housing

Friday, the U.S. Treasury finalised a new tax credit income regulation that may qualify additional housing projects and extended placement deadlines.

The regulation clarifies a 2018 statute to provide developers additional financing flexibility.

Previously, projects qualifying for the tax credit, which may cover up to 70% of an affordable housing project's expenditures, required to make at least 20% of the units accessible to households earning 50% or 60% of the local area's median income (AMI).

The new policy permits at least 40% of a project's units to satisfy 60% AMI, enabling higher-income renters to mingle with lower-income households.

The adjustments announced Friday follow Treasury's July decision to provide state, local, and tribal governments additional flexibility in utilising COVID-19 funding for affordable housing, including direct long-term project loans.

National Multifamily Housing Council vice president of capital markets Dave Borsos said the modification will maintain more low-income residents in such apartments even if their income improves marginally.

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