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In a significant development for Nebraska’s housing market, Governor Jim Pillen recently enacted L.B. 182, transforming the state’s Low-Income Housing Tax Credit (LIHTC) program effective January 1, 2024. This new legislation allows recipients to transfer, sell, or assign their LIHTC credits to other taxpayers, including nonprofit organizations.
According to a Novogradac analyst, this move could fundamentally change the landscape for housing investments, offering new financial avenues for developers and nonprofits alike. As we look ahead to 2025, the critical question remains: will these changes facilitate funding for low-income housing projects or necessitate astute tax planning strategies?
Overview of Nebraska’s 2025 LIHTC Framework
The recent amendment to Nebraska’s LIHTC is designed to offer greater flexibility than ever before. Traditionally tied to the federal LIHTC amounts, L.B. 182 now allows developers and organizations to transfer credits to other eligible taxpayers, significantly widening the pool of potential beneficiaries. Nonprofits, which were previously unable to utilize these credits, can now take advantage of this opportunity starting with tax filings in 2025.
Key Features of the New Legislation
With the introduction of L.B. 182, several important features come into play:
| Feature | Details | Effective Date |
|---|---|---|
| Transferability | Option to sell, assign, or transfer credits | January 1, 2024 |
| Eligibility | Now includes nonprofits | Tax Year 2024 onward |
| Credit Match | Aligns with federal LIHTC calculations | Ongoing |
Under the new law, the transferability of state LIHTC becomes effective on January 1, 2024. There is currently no limit on the volume of transactions, and compliance remains aligned with federal guidelines to ensure that rental units remain affordable for at least 15 years.
Economic and Housing Impacts
This legislative change positions Nebraska to address the pressing challenge of affordable housing, estimated to have a shortfall of 3.8 million units nationwide, as reported by Freddie Mac for 2025. By allowing the transfer of credits, developers can potentially optimize resource allocation, selling credits to corporations or higher-income taxpayers who carry larger tax liabilities, thus accelerating funding for housing projects.
Nonprofit organizations now have a key resource at their disposal, enabling them to drive community-focused housing initiatives. As observed by Novogradac, “Flexibility drives scale,” highlighting the potential economic benefits that could materialize by 2025.
Navigating the 2025 LIHTC Changes
To effectively engage with Nebraska’s new LIHTC framework, here are some actionable steps to consider:
- Assess Eligibility: Ensure your organization meets the qualifications stipulated by L.B. 182.
- Explore Transfers: Identify potential buyers, such as corporations or high-income individuals, who may benefit from purchasing unused credits.
- Leverage Resources: Consult Novogradac’s Introduction to LIHTC (8th Edition) for essential compliance and calculation information.
- Plan for 2025: Prepare your tax filings for 2024 while considering the implications of these transfers, ensuring you capitalize on available credits.
Conclusion: Strategize for Nebraska’s 2025 LIHTC Shift
The enactment of L.B. 182 by Governor Pillen marks a transformative moment for the Nebraska LIHTC program, opening doors for credit transfers and enabling nonprofit involvement starting with the 2024 tax year.
The need to balance funding enhancements with compliance obligations will reshape the future of affordable housing in Nebraska as we approach 2025. As noted by experts, this shift represents a significant change in the utilization of tax credits. Now is the time to refine your strategy to fully leverage the opportunities presented by these legislative updates.
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