The New Markets Tax Credit (NMTC) is intended to incentivize community development and economic growth through the use of tax credits that attract private investments to distressed communities.
Who can benefit
The NMTC is ideal for developments of $5 million or more. Typical projects involve the acquisition, rehabilitation, or construction of real estate in low income communities. These can include:
- Manufacturing and industrial facilities
- Community centers
- Commercial offices and retail
- Mixed use (commercial/residential) properties
- Schools, universities, vocational training facilities, other educational uses
- Theaters, museums, restaurants, and entertainment venues
- Assisted living facilities
- Medical clinics
- Hotels and hospitality properties
- Machinery and equipment purchases
A developer wants to build a $10 million dollar manufacturing facility in a New Markets designated area and receives $10 million dollars in New Markets financing. The generated tax credit would equal 39 percent (or $3.9 million) over a seven year compliance period. The developer can then negotiate the sale of these credits and receive approximately $3 million from the New Markets Tax Credit investor to help finance the facility. At the end of the seven year compliance period, the $3 million in investor equity typically reverts to the developer.
New markets tax credit services
Our tax professionals have a deep understanding of federal and state tax laws. We can help you determine if your business or potential project is in a qualified census tract, navigate the complex filing requirements, and stay compliant with the program. Our industry expertise allows us to evaluate your options. Our modeling tools can offer you insights into transaction structuring. The combination can help you make informed decisions.