This section provides more details on how private-activity bonds can be used for affordable rental housing and the local role in making the most of this resource. The lower level of credits are most often used for projects with relatively low development costs – such as preservation projects requiring only light rehabilitation – or when there is a significant additional subsidy available from the government or from market-rate units in mixed-income developments. It also makes private activity bonds for affordable housing preservation or development more valuable than bonds used for other potential activities.įour percent LIHTCs are worth only about half as much as the competitive 9 percent LIHTC, but the 4 percent tax credits are available as-of-right when the bond cap is used for affordable multifamily rental properties. This combination of lower-cost financing (through the private activity bond) and equity (through the 4 percent LIHTC) can be a powerful way to expand the resources available for dedicated affordable rental housing. It is the primary source of funding for increasing and preserving supply of affordable rental homes.s (LIHTCs, or tax credits).
While there are benefits to using private activity bonds for most qualifying uses, the bonds are especially valuable when used to finance qualifying affordable multifamily rental housing, as these developments automatically receive federal 4 percent Low Income Housing Tax Credit A dollar-for-dollar tax reduction against federal tax liability, provided to developers based on the criteria set out in the states' qualified allocations plan. The bond is repaid with income generated from the activities financed. These bonds are used to fund private activities that have a public benefit, such as upgrades to airports, hospitals, and water treatment facilities, the construction or rehabilitation of multifamily affordable rental developments, and home mortgages for first-time homebuyers. Finally, localities may need to convince state officials to allocate more of the state’s private activity bond volume to multifamily affordable rental housing, rather than other uses.Įach year, the federal government authorizes each state to issue a specified volume of tax-exempt private activity bonds. Localities may also need to apply additional subsidy to cover the “gap” between construction costs and the funding available through a combination of the equity from the 4 percent LIHTC credit and the debt that can be raised based on expected rents. To increase access to this valuable resource, localities will need to identify the types of affordable housing development that work best with private activity bonds and 4 percent LIHTC credits in their jurisdiction this often means rehabilitation, rather than new construction. While private activity bonds can be used for many different purposes, they are especially valuable when used to support the development or rehabilitation of qualifying multifamily affordable rental housing, as this triggers the automatic award of 4 percent Low-Income Housing Tax Credits (LIHTC). Then post your completed form to us together with the Bond certificates to be cashed in (if you have them).ĭon’t have access to a printer? Call us and we’ll send you a copy of the form.One way to increase the amount of federal subsidy available to support affordable rental housing is to expand the use of tax-exempt private activity bonds A tax-exempt bond issued by the state government to fund public projects, and are an important source of funding for affordable housing. You can also download, print and complete a cashing in form. If you’d like to take money out of Premium Bonds, but make sure that certain Bonds are kept in the draw, you can do this online using a form. Please note: you must be the person responsible for the child’s Premium Bonds in order to withdraw them or close the account. Make sure you have your account details to hand. All you need to do is fill out a quick online form.
Not registered? You can easily withdraw money from yours or your child’s Premium Bonds without needing to create an online profile.
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