Low-Income Housing Tax Credits

The low income housing tax credit is available under Section 42 of the Internal Revenue Code of 1986, enacted to provide the private market with an incentive to invest in affordable rental housing.

Federal housing tax credits are awarded to developers of qualified projects which meet certain low income occupancy and rent limitation requirements.

Provided the property maintains compliance with the program requirements, investors receive a credit against their Federal tax liability each year over a period of 10 years, allocated by the Montana Board of Housing in Montana.

The amount of the annual credit is based on the amount invested in the affordable housing. Developers then sell these credits to investors to raise capital (or equity) for their projects, which reduces the debt that the developer would otherwise have to borrow. Because the debt is lower, a tax credit property can in turn offer lower, more affordable rents.  The credit can also be sold to investors to act as a financing source.

The Montana Board of Housing will provide fixed rate mortgages for low income rental housing which meet underwriting eligibility and receive approval of HUD mortgage insurance.

For more information about the LIHTC program, visit HUD’s website at http://www.hud.gov/offices/cpd/affordablehousing/training/web/lihtc/basics/.

For LIHTC compliance forms for the state of Montana, visit MBOH’s website at http://housing.mt.gov/About/MF/lihtccompliance.mcpx#MFcomplForms .

Mortgage Credit Certificates

A Mortgage Credit Certificates were authorized by Congress to assist homebuyers with moderate and low incomes.  MCCs reduces your tax liability, dollar-for-dollar, by a percentage of the mortgage interest you pay.

If you qualify for an MCC, you will be able to claim 20% of the interest you pay on your mortgage as a credit on your federal income taxes. You can save up to $2,000 per year on your federal taxes, money that can be put toward your mortgage payment.

An MCC can be used with almost any type of mortgage, including adjustable rate mortgages. However, it cannot be used with the Montana Board of Housing's First-Time Homebuyer Mortgage.

You can receive an immediate benefit from your MCC tax credit by filing a revised W-4 (Employee’s Withholding Allowance Certificate) with your employer.

For more information on MCCs, visit the Montana Board of Housing’s website at http://housing.mt.gov/HHRSN/Homebuyer/hbwhatweoffer.mcpx .

Reverse Annuity Mortgage

Through the Montana Board of Housing’s Reverse Annuity Mortgage, senior Montana homeowners can more substantially provide for their own in-home support.  Lower income seniors 68 years or older have the ability to borrow the equity in their homes and benefit from the additional income.

Borrowers must meet income levels which can be found at http://housing.mt.gov/About/MF/ram.mcpx