The Opportunity Zones Program offers a groundbreaking federal tax incentive designed to encourage development in some of the nation’s most economically distressed areas. Created as a result of the Tax Cuts and Jobs Act of 2017, the Opportunity Zones Program, or O-Zones Program, permits borrowers to defer paying their capital gains taxes until 2027, provided that they invest in an Opportunity Fund, a special financial vehicle which must invest at least 90% of its assets in a Qualified Opportunity Zone. With their long terms, high leverages, and low interest rates, HUD multifamily loans are ideal for developing multifamily properties in Opportunity Zones.
The Low-Income Housing Tax Credit (LIHTC) program is a federal government tax credit, that, since 1986, has helped facilitate the construction and rehabilitation of approximately 2.4 million affordable housing units througout the U.S. Unlike tax deductions, which create a reduction in taxable income, tax credits provide a dollar-for-dollar reduction in an investor’s tax liability, which can be an incredibly attractive proposition.
The Rental Assistance Demonstration (RAD) Program is a federal housing program administered by HUD, which was enacted in 2012 as a part of the Consolidated and Further Continuing Appropriations Act. The RAD program allows properties using HUD legacy programs to convert their properties to HUD Section 8 housing, which is much better understood, and more easily permits the use of private capital to fund rehabilitation work.