Tax

Tax Incentives for Housing Developers in Iowa

January 2015
Author:  Larisa Trikhacheva

Larisa Trikhacheva

Senior Managing Consultant

SALT Services

Manufacturing & Distribution

1201 Walnut Street, Suite 1700
Kansas City, MO 64106-2246

Kansas City
816.221.6300

Developers building or rehabilitating housing in Iowa may be eligible to receive certain state tax incentives starting in 2015.

House File 2448 established the new Workforce Housing Tax Credit Program. The regulations took effect December 31, 2014, although the program will not begin until administrative rules are finalized and adopted. The Iowa Economic Development Authority (IEDA) says administrative rules for the program are in the review process. Rules, procedures and a project application will be available in the near future.

Eligibility Requirements

  • The new program is offered to housing developers, housing contractors and not-for-profit organizations that complete housing projects in the state.
  • Housing projects must focus on new construction, rehabilitation, redevelopment or repair of dwelling units located in the distressed workforce housing communities, upper story of an existing multiuse buildings, dilapidated dwelling units or brownfield/grayfield sites.
  • The developer must build or rehabilitate at least four single-family homes or at least one multifamily building containing three or more units or at least two upper-story units.
  • Total project costs may not exceed $200,000 per unit for new construction or $250,000 per unit for rehabilitation.
  • The housing project must be completed within three years of receiving the award.
  • The IEDA must approve the developer’s credit application prior to beginning the project.

Program Benefits

  • Qualified businesses may claim a refund for sales and use tax paid on purchases directly related to the housing project.
  • Qualified business also may claim an investment tax credit up to 10 percent of the investment directly related to the construction or rehabilitation of the housing, excluding the portion of the total cost financed by federal, state or local government tax credit grants and forgivable loans.
  • The tax credit could be subject to recapture and can be claimed only after receiving a tax credit certificate from the IEDA.
  • The tax credit is not refundable but fully transferable to any person.
  • Total program benefits are limited to $1 million per recipient.

For more information on how this new policy may apply to you, or if you have questions regarding how you can use the opportunities available under these procedures, contact your BKD advisor.

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