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On October 19th, the IRS opened up its portal to apply for the Low Income Communities Bonus Credit. Unlike other bonuses (sometimes referred to as adders) that apply to the investment tax credit, this bonus requires an allocation from the Department of Energy and one must apply to receive an allocation.
This portal is not the portal that everyone is waiting for to register an investment tax credit for sale. However, it is an important step forward.
To be eligible for the 10% bonus, the project needs to be in a low income community or on Native American land. The bonus may be increased to 20% if it is treated as a qualified low income residential housing project that participates in a covered housing program as defined by HUD or shares at least 50% of its benefits with certain low income households.
You can read more about the eligibility criteria in our prior blog post.
A bonus increases your credit by 10% or 20% points. For example, for each $1,000,000 of qualified basis related to a project eligible for the investment tax credit, this bonus would increase the amount of the credit by $100,000 to $200,000.
If you are eligible for this credit, it makes sense to apply for an allocation. It also may make sense to apply early since allocations are limited and after 30 days applications will be reviewed on a rolling basis.
Thanks for reading this post on the opening of the IRS portal for the Low Income Communities Bonus Credit. We hope you found it helpful. If you have tax credits that you are looking to sell, we hope you will consider using Atheva. We have buyers looking to purchase credits and you can list to test the market without any cost to you.
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Atheva does not provide tax or legal advice and you are encouraged to consult with your own tax or legal advisor regarding any legal or tax matter discussed herein.
