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Good idea for the planner. He probably gets at least 7% and maybe
10% up front.
Congress has indeed passed law allotting tax credits over 10 years
for low income housing projects. You can refile your taxes for
the 3 previous years and claim credits, and if you can't take all your
credits each year, you can carry them forward for I thought 10, but
somebody here corrected me that you can carry them longer than that.
The problem is the alternative minimum tax.
If you live in a high state-tax state or have a bunch of other preference items, the amount you can take each year of your tax credits is quite a bit less than you've been led to believe.
I bought one of these in 1992. I paid into it over the first 5 years, and the credits are allowed over 10 years. It pays about $7000
yearly, but I have some $18000 accumulated that I haven't been able to take. I figure I'll be able to use the accumulation before the period over which I can take them runs out.
Study form 3800, which limits how much in credits you can take.
If you have Turbotax or a similar tax program, plug in $7000 low income tax credit on form 3800 just to see how much the credit would actually reduce your taxes.
You would be doing good in helping low income people have decent housing, so you may like the investment from an altruistic point of view. It is legal, and eventually you will come out ok, but it isn't as great as you may have been led to believe.
Best wishes, Chris
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