Congress has passed and the President has signed the Protecting Americans from Tax Hikes (PATH) Act of 2016.
The legislation includes a number of permanent (as opposed to temporary) extensions of expiring tax provisions. Included in these is a permanent extension for the minimum low-income housing tax credit rate for non-Federally subsidized buildings – (the 9%) credit. It also extends the military housing allowance exclusion for determining whether a tenant in certain areas of the country is low-income.
Section 131 of the Act makes the 9% tax credit for new LIHTC projects and rehabilitation expenditures permanent. This does not apply to the acquisition cost of existing projects or projects that use tax-exempt bond financing. These projects must still use the floating 4% tax credit percentage. This amendment is retroactively effective as of January 1, 2015.
Section 132 of the Act extends permanently the exclusion of the military housing allowance from income for LIHTC purposes for certain areas of the country. Excluded areas include any county which contains a qualified military installation to which the number of members of the Armed Forces assigned to the units based out of such qualified military installation increased by 20% or more as of June 1, 2008 over the personnel level of December 31, 2005 and also includes any adjacent counties. The affected military installations have to have at least 1,000 members of the Armed Forces assigned to it.
A list of areas in which the BAH exclusion is applicable can be found here.