Tax credits are financial incentives provided by governments at various levels to encourage specific behaviors or investments that contribute positively to the economy or society. They work by reducing the amount of tax owed by an individual or entity directly. Essentially, tax credits serve as a dollar-for-dollar reduction in your tax liability, meaning they directly decrease the amount of tax you owe, as opposed to deductions which reduce taxable income.

 

​

​

Now, let's delve into the types of tax credits that are pertinent to your development project:

 

1. Historic Rehabilitation Tax Credits: These credits are designed to encourage the rehabilitation and preservation of historic buildings. Developers who undertake qualified rehabilitation projects on eligible historic structures can claim a percentage of their qualified expenses as tax credits.

 

2. Low-Income Housing Tax Credits (LIHTC): LIHTC is a crucial tool in the development of affordable housing. Investors in qualified low-income housing projects are eligible for tax credits over a period of time, typically 10 years, based on the amount of affordable housing units provided.

 

3. Renewable Energy Tax Credits: These credits aim to incentivize the production and use of renewable energy sources such as solar, wind, and geothermal. Developers and investors in renewable energy projects can claim tax credits based on the type and size of the project.

 

4. New Markets Tax Credits: NMTC is a federal program designed to stimulate investment in low-income communities. Investors in qualified community development entities can receive tax credits equal to a percentage of their investment over seven years.

 

5. Film and Entertainment Tax Credits: Many states offer tax credits to attract film and television production, as well as other entertainment projects. These credits can cover a percentage of qualified production expenses incurred within the state.

 

6. Other State-Specific Tax Credits: Various states offer additional tax credits tailored to specific industries or activities, such as research and development, job creation, or environmental conservation.

 

As your legal counsel at Wingate Law, we specialize in assisting developers, investors, and syndicators in navigating the complexities of these tax credit programs. Our expertise lies in ensuring compliance with the intricate regulations governing each credit, maximizing your eligible credits, and optimizing their impact on your development project's financial viability.

 

It's crucial to engage with knowledgeable legal counsel early in your development process to fully understand the eligibility requirements, application procedures, and compliance obligations associated with tax credits. By leveraging these incentives effectively, we can help you minimize your tax burden and maximize the success of your development endeavors.