Toolkit Addresses Excessive Taxes on Affordable Housing
A new resource from NAHB’s Housing Credit Group — the “Local Tax Assessment Toolkit for Affordable Housing Programs” — addresses excessive local real estate tax assessments of affordable housing projects.
The toolkit includes a state-by-state analysis of existing tax assessment legislation and case law, model legislation and other Low Income Housing Tax Credit (LIHTC) resources that developers and owners can use to respond to assessments that increase their costs, threaten existing properties and discourage the development of new affordable housing.
Commercial properties can be assessed by their replacement cost, comparable sales or income. Under the replacement-cost approach, the value of the property is the estimated cost of replacing the structure, less depreciation. Under comparable sales, the value is based on the recent sales of similar properties in the marketplace. Using the income approach, an assessor converts cash flow into property value using the capitalization rate. Of these methods, the income approach best represents the reality of affordable housing properties.
Several states have passed legislation addressing the valuation of affordable housing properties. Many of these statutes require valuations based on income for LIHTC projects, but other statutes take a broader approach. The toolkit summarizes how affordable housing properties are assessed in each state and provides a successful model for legislation in states where the laws are not favorable.
This toolkit is available to home builders associations. For more information, e-mail Carmel McGuire at NAHB, or call her at 800-368-5242 x8207.
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