Improving a Distressed Property in Henderson? There May Be a Tax Credit for That

Proposed legislation could make it possible to receive a federal tax credit for rehabilitating single-family homes in distressed communities. This could make home improvement projects worthwhile for developers, local governments, and lenders while improving the quality of life in these communities.

What Is the Neighborhood Homes Investment Act (NHIA)?

Sponsored by congressmen Brian Higgins (D-N.Y.) and Mike Kelly (R-Pa.), the bipartisan Neighborhood Homes Investment Act could be the answer that blighted communities need. It has become increasingly difficult for the real estate market to deal with homes that are in a condition where repair costs outweigh purchase prices. This problem has led to homeowners walking away from homes, increases in the numbers of absentee landlords, and poor living conditions, especially for low-income renters.

The NHIA tax credit would be an incentive for developers to purchase and rehab blighted homes or replace them with new homes. It has been proposed that the credit would be up to 35 percent of the eligible development cost. These credits would be awarded to project sponsors through competitions administered by housing finance agencies at the state level. Investors could claim their NHIA tax credit when they resell the homes they rehabilitate. They could also use the credits in raising investment capital for their existing projects.

A tax credit like NHIA would help close the value gap between the initial worth of the home in need of repair and the costs for making improvements. It would also decrease the risk of loss associated with this type of real estate investment.

Economic Benefits the NHIA Tax Credit Could Bring

The NHIA tax credit could be the answer to the housing crisis many communities face. Blighted and abandoned neighborhoods could be revitalized, and property values increased, which is good for all in the communities.

The tax credit would encourage developers to invest in blighted neighborhoods, help create opportunities for affordable home ownership, preserve the character of communities, and improve the lives of working families and neighborhoods.

It is estimated that half a million homes could be rehabbed within the next 10 years. This could bring up to $100 billion in development activity, including:

• The creation of 785,714 jobs in construction and other construction-related industries
• $42.9 billion in salaries and wages
• $29.3 billion in local, state, and federal tax revenues and fees

Taylor L. Randolph

Taylor L. Randolph, the founder of Randolph Law Firm, P.C., located in Las Vegas, Nevada. He focuses his practice on bankruptcy, foreclosure prevention, and IRS tax problems. An award-winning attorney who is admitted to practice before the IRS nationwide, Taylor excels in the representation of individuals and businesses who are facing legal challenges.

Years of Experience: Nearly 20 years
Nevada Registration Status: Active

Bar & Court Admissions: Nevada State Bar Association U.S. District Court District of Nevada, 2006 U.S. Supreme Court, 2006 U.S. Tax Court, 2006