The NMTC Program permits taxpayers to receive a credit against Federal income taxes for making qualified equity investments in designated Community Development Entities (“CDEs”). Substantially all of the qualified equity investment must in turn be used by the CDE to provide investments in low-income communities. The credit provided to the investor totals 39 percent of the cost of the investment and is claimed over a seven-year credit allowance period. In each of the first three years, the investor receives a credit equal to five percent of the total amount paid for the stock or capital interest at the time of purchase. For the final four years, the value of the credit is six percent annually. Investors may not redeem their investments in CDEs prior to the conclusion of the seven-year period.
NMTCs have proved to be a valuable tool in bridging the financing gap in a variety of development projects and business ventures. The attorneys at PackardDierking have the expertise and experience to assist clients in all aspects of the NMTC Program, including preparation of allocation applications, CDE formation and representation of borrowers and investors in NMTCs transactions.