REST Easy with Mahoney April 2024

Important News for the Affordable Housing Industry

Applicable Federal Rates (AFR)

Index of Applicable Federal Rates

 AnnualMonthly
Short-Term4.68%4.59%
Mid-Term3.98%3.91%
Long-Term4.18%4.10%
 AnnualMonthly
Short-Term4.71%4.62%
Mid-Term4.13%4.06%
Long-Term4.40%4.31%
 AnnualMonthly
Short-Term4.89%4.78%
Mid-Term4.30%4.21%
Long-Term4.45%4.36%
 AnnualMonthly
Short-Term4.97%4.86%
Mid-Term4.42%4.33%
Long-Term4.55%4.46%
 AnnualMonthly
Short-Term5.12%5.01%
Mid-Term4.66%4.57%
Long-Term4.79%4.68%

Upcoming Deadlines

By Anjelica Smith

MHFA
~ Carryover Application: 11/1/2024
~ Final CPA Certification: 5/1/2024
~ Low Income Housing 9% – 2024 Multifamily Consolidated RFP/2025 Round 1 Tax Credit Allocation Applications:  7/11/2024

CPED/St. Paul PED
~ Carryover Application: 11/1/2024
~ Final CPA Certification: 5/1/2024
~ St. Paul Low Income Housing 9% RFP Tax Credit Allocation Applications: 7/5/2024
~ Minneapolis Low Income Housing 9% RFP Tax Credit Allocation Applications: TBD but anticipating mid-July

Dakota County CDA
~ Carryover Application: 10/16/2024
~ Final CPA Certification: 10/2/2024
~ Low Income Housing 9% RFP Tax Credit Allocation Applications: 7/11/2024

Washington County CDA
~ Carryover Application: 10/2/2024
~ Final CPA Certification: 5/1/2024
~ Low Income Housing 9% RFP Tax Credit Allocation Applications: 7/11/2024

Other
~ Unified Pool for Tax Exempt Bonds via MMB applications: Early July
~ Partnership Tax Return Due Date with Extension- 9/15/2024
~ Individual and C Corp Tax Return Due Date with Extension- 10/16/2024

** If you have not submitted your 8609 packages, please do so as soon as possible to ensure receipt of Form 8609 by the 9-15-24 tax return due date if claiming credits in 2023 tax year.

Updates

By Kyle Krenske

This year started off with some potential favorable tax provisions when the U.S. House of Representatives passed HR 7024, The Tax Relief for American Families and Workers Act of 2024, on January 31, 2024. The bill extends 100% bonus depreciation, increases the refundable Child Tax Credit, and reinstates deducting domestic research expensing in the first year under IRC Section 174. This bill has moved forward to the Senate for consideration. Unfortunately, this bill has stalled at the Senate. The Senate recently passed a reauthorization bill for the Federal Aviation Administration but did not include consideration of this House-passed tax bill.

On May 7, 2024, the U.S. Department of Housing and Urban Development (HUD) published a final rule in the Federal Register regarding changes made from the Housing Opportunity Through Modernization Act (HOTMA) of 2016. See Jeff’s compliance update article on HOTMA. REST Easy with Mahoney December 2023 – Mahoney | CPAs and Advisors (mahoneycpa.com)

The Internal Revenue Service (IRS) posted in the Federal Register a notice and request for comments for Form 8823, Low-Income Housing Credit Agencies Report of Noncompliance or Building Disposition. No changes have been made but the review is to extend the use of the current form. Written comments are due by June 10, 2024.

There was an additional $8.2 million in unused federal Low-Income Housing Tax Credits (LIHTCs) that the IRS allocated to 28 States. This Revenue Procedure 2024-18 supplements Revenue Procedure 2023-32.

The Minnesota State Housing Tax Credit (SHTC) Program and Contribution Fund is a new way that eligible taxpayers can help contribute to affordable housing programs in Minnesota and receive a state tax credit of up to 85% of the contribution. Eligible taxpayers in Minnesota can contribute between $1,000 and $2 million to the SHTC Program and Contribution Fund. Contributions can be made to a general contribution pool or designated to a specific project. It is important to verify requirements of an eligible taxpayer to qualify for the Minnesota state tax credit for your contribution. Here is a link to the Minnesota Housing website for more information. State Housing Tax Credit (SHTC) (mnhousing.gov)

If you have any questions or would like more information, please reach out to Kyle Krenske at kkrenske@mahoneycpa.com.

A Win for Affordable Developers!

By Logan Wolfe

A decision was made in a court case between 23rd Chelsea Associates, L.L.C, an affordable housing project, and the Commissioner of Internal Revenue (The Commissioner). The issue that was being discussed was the treatment of bond issuance costs and if any of the costs can be included in the project’s eligible basis.

Many investors were not willing to include amortization of bond issuance costs in a project’s eligible basis. This was because of Technical Advice Memorandum (TAM) 200043015 issued in 2000 that states bond issuance costs are ineligible costs, which The Commissioner agreed with. The developer, and many other industry professionals, disagreed with the TAMs prescribed treatment of bond issuance costs and included a portion of them in the project’s eligible basis. A ruling was made in February of 2024 in favor of the developer. Since the United States Tax Court ruling contradicts with the TAM, investors that did not previously allow for bond issuance costs to be included in eligible basis may finally allow projects they’re investing in to include a portion of these costs. The inclusion of these bond issuance costs would increase the deliverable tax credits for the project—which is a win for developers and investors!

Reporting of Beneficial Ownership Information (BOI)

Jeff DeGree

In 2021, the Corporate Transparency Act (CTA) was enacted. One of the requirements included in the CTA is for certain entities to disclose beneficial ownership information (BOI) for people who own or control a company. BOI reports must be filed with the Financial Crimes Enforcement Network (FinCEN), an agency of the Department of Treasury.

What entities are required to comply?
Domestic companies required to report include corporations, limited liability companies (LLCs) or any similar entity created by the filing of a document with a secretary of state or any similar office under the law of a state or Indian tribe. Domestic entities that are not created by the filing of a document with a secretary of state or similar office are not required to report under the CTA. Foreign companies required to report under the CTA include corporations, LLCs or any similar entity that is formed under the law of a foreign country and registered to do business in any state or tribal jurisdiction by filing a document with a secretary of state or any similar office.

Are there any exemptions?
There are 23 categories of exemptions, including publicly traded companies, banks and credit unions, securities brokers/dealers, public accounting firms, tax-exempt entities and certain inactive entities, among others.

When must companies file?
The filing timeframes will depend on when an entity is registered/formed or if there is a change to the beneficial owner’s information.

  • Companies created or registered to do business before January 1, 2024, will have until January 1, 2025, to file their initial report.
  • The initial filing date for companies created during 2024 would be 90 days after the entity’s formation/registration with the state agency.
  • The initial filing date for companies created after 2024 would be 30 days after the entity’s formation/registration with the state agency.
  • Reporting entities that discover an error in a previously filed report or need to update BOI data will have 30 days from when the entity becomes aware of the error or the change in information.

Understand your reporting requirement.
The responsibility for understanding your BOI/CTA reporting obligations resides with you. This blog should not be construed as legal advice, and it should not take the place of your own careful review of the rules. Please visit the FinCEN website at www.fincen.gov/boi or consult with your legal counsel.

Penalties for willfully not complying with the BOI reporting requirement can result in criminal and civil penalties of $500 per day and up to $10,000 with up to two years of jail time. As always, planning ahead can help you comply and understand your filing obligations.

What's Happening at Mahoney Development Services, LLC (MDS)

By Andy Hughes

Mahoney Development Services, LLC (MDS), an affiliate of Mahoney assists Real Estate Developers and Investors with consulting and advisory services to manage the busy development projects in their Real Estate portfolio. See below for what’s going on at MDS.

MDS staff are gearing up for a busy application season for Minnesota projects, with applications planned for various funders for projects across the metro and greater Minnesota. The projects include new construction, preservation and supportive housing. MDS is also excited to have assisted 6 clients with successful funding applications to Hennepin County as part of its most recent funding round.

To learn more about Mahoney Development Services visit our MDS page. 

Out and About with The Real Estate Solutions Team

By Megan Bacon

The Real Estate Solutions Team at Mahoney has been out and about attending various firm events and affordable housing events in our community. Please take a look and see where we have been recently.

 

January 5, 2024 – Mahoney enjoyed a morning of entertainment from Billy McLaughlin. From keynote speaking, to a solo performance with his guitar, he really does it all!

 

January 6, 2024 – Everyone got to choose and make their own craft at Upstairs Circus!

February 17, 2024 – The firm and REST like to break up the busy season by going bowling one Saturday every February. It’s a great way to relieve some stress and have some fun (REST’s very own Jeff DeGree is almost as good as the pros!).

February 2, 2024 – As a little kickoff to busy season and thank you for the great 2023 year, the firm was treated to some GIANT Eileen’s Colossal Cookies!

April 1, 2024 – Mahoney had a pizza party for April Fool’s Day…just kidding!

April 15, 2024 – Mahoney celebrated the end of busy season by heading to Smash Park in Roseville for pickleball, darts, yard games, arcade games, karaoke, food and drinks!

April 17, 2024 – A member of our team attended Project for Pride in Living’s (PPL) Volunteer Appreciation Event with another member of Mahoney’s Volunteer Committee. PPL’s Mission is: PPL builds the hope, assets, and self-reliance of individuals and families who have lower incomes by providing transformative affordable housing and career readiness services. If you’re interested in volunteering with PPL, you can find more information here.

May 9, 2024 – Our Real Estate Solutions Team attended the conference and had a great time learning and networking with others in the affordable housing industry.

REST Employee Spotlight

By Nicole Baker

Hi, my name is Nicole Baker. I am one of the newest Associates to Mahoney’s Real Estate Solutions Team. I graduated from Concordia University, St. Paul in August 2023, and found myself joining Mahoney just in time for my first busy season. I had spent all busy season working on real estate tax returns and have enjoyed learning the ropes thus far.

In my free time I enjoy spending time with my family and friends, traveling, and being involved in sports. I have traveled quite a bit throughout my life, a few of my most recent trips being Japan, Arizona, and Tennessee. Somewhere I haven’t been but hope to visit soon is Ireland. I also travel to Milwaukee, WI as often as I can to spend time with my nephew. Aside from traveling, I spend a lot of my summer and fall months playing softball, hiking with the motivation of a scenic view, and attempting to golf. During those cold winter months, I bowl and go to as many Minnesota Wild games as I can. Hockey has always been my favorite sport, so after hanging up the skates after graduating high school, I invested my time being a diehard Wild fan.

I have a few fun facts that I can share about myself, the first being a hidden talent, I can juggle. Secondly, I had once swam with manatees (and I will never do that again). Lastly, I had lived in Japan for a couple of years during my childhood.

Feel free to connect with me at nbaker@mahoneycpa.com or LinkedIn with any questions you may have regarding real estate development.

*Photo credit in this section to Nicole Baker