New Virginia Opportunity Tax Credit Program

Williams Mullen

On March 1, 2021, the Virginia General Assembly approved legislation creating the Virginia Opportunity Tax Credit Program (Program), a new state low-income housing tax credit (LIHTC) that contributes an amount to a qualified project that is equal to the amount received from the federal LIHTC program.

The Program will make $15 million in tax credits available each calendar year for a five-year period beginning on January 1, 2021, and ending on January 1, 2026. To qualify a project must be placed in service on or after January 1, 2021, and receive an eligibility certificate from Virginia Housing (formerly known as the Virginia Housing Development Authority). Any housing opportunity tax credit not used in a taxable year is nonrefundable, but may be carried forward for the succeeding five years.

The legislation authorizes Virginia Housing to promulgate regulations and guidelines to govern the administration and implementation of the Program, which may include imposition of application, allocation, certification and monitoring fees designed to allow the Authority to recoup its administrative costs. The regulations may also govern the sale of the awarded tax credits to unrelated taxpayers. The regulations and guidelines regarding the sale of credits, if promulgated, will not take effect prior to January 1, 2023, and will not apply to credits awarded prior to January 1, 2023.

The Program seeks to address a shortage of affordable housing in Virginia, which stood at 400,000 units as of 2018 according to the National Low Income Housing Coalition. Virginia would join 18 other states that have enacted similar low-income tax credit programs. For more information on low income tax credit programs in Virginia and other states, click here.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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