Tax Credits and Their Effect on Corporations Investment in Low to Moderate Income Communities

Author

Tonja Evette Paige, Fontbonne College

Year of Award

1994

Degree

Master of Business Administration (MBA)

College

College of Business & Professional Studies

Degree Program

Business Administration

Department

Business Administration

Keywords

qualified, housing, loans, rehabilitation, credit

Abstract

This paper studies the tax credits and their effect on corporations investing in low- to moderate-income communities. The low-income housing tax credit was enacted by Congress as part of the Tax Reform Act of 1986. The tax credit was permanently extended by the Revenue Reconciliation Act of 1993. This has been a very hot issue for providing housing for low- to moderate-income individuals. I would like to propose by my thesis that low-income housing tax credits are a major factor in a corporation's decision to invest in low-income housing. The tax credits offer an incentive for investors who build, rehabilitate or acquire low-income residential housing property. The investor may receive up to 70 percent of the cost of construction for qualified buildings. The tax credit reduces the amount of the investor's taxes because the investor can claim depreciation losses which also reduce the taxes. If an investor decides to invest in low- to moderate-housing communities, this is a way of reducing the tax obligation while also doing good for the community. However, critics argue that providing low-income housing for the needy may be more detrimental than beneficial to a community. They cite that low-income housing units decrease the property values within a neighborhood and increase the occurrence of crime.

Document Type

Restricted Thesis

Recommended Citation

Paige, Tonja Evette, "Tax Credits and Their Effect on Corporations Investment in Low to Moderate Income Communities" (1994). All Theses, Dissertations, and Capstone Projects. 200.
https://griffinshare.fontbonne.edu/all-etds/200