There is a bill circulating through Congress which will give tax credit to developers of rental housing for low- to middle-income tenants. The Bill was introduced in April by Rep. Ben Cardin, D-Md. and Rep. Thomas Reynolds, R-Texas, and referred to the Committee on Ways and Means, which deals with tax issues. The bill has 184 co-sponsors so far. If you are a real estate investor/developer who has ignored this market due to low profit potential you may want to reconsider.
Investors could receive a tax credit of up to 50 percent of the cost of developing each home.
“What the credit does is fill in the gaps between what the property can sell for and what it costs to develop,” saidbLinda Goold, tax counsel to the National Association of Realtors.
A tax credit is considered more valuable than a tax deduction because it is subtracted, dollar-for-dollar, from the total amount of federal income taxes owed. A tax deduction, on the other hand, is subtracted from gross income before federal income taxes are calculated.
In my opinion there is more to real estate investing than just profits. At some point we need to give back to the community. Building and rehabbing low-income rental housing is sometimes not profitable, but with this proposed tax credit we can give back to the community and still realize some profits. It’s a win-win situation.
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1 Real Estate Investing Realistically » Bill Would Give a Break to Low Income Housing Developers // Nov 17, 2005 at 12:27 pm
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