Real estate developers in Missouri have access to dozens of state and federal tax credits that can help you maximize profitability and minimize costs. Some programs, like the Low Income Housing Tax Credit (LIHTC) and Historic Preservation Tax Credit Program (HTC), are available as both federal and state credits. Other programs, such as the Business Use Incentives for Large-Scale Development (BUILD) and the Missouri Affordable Housing Assistance Program, are only available as tax credits in Missouri. Other credits, both on the state and federal levels, offer developers thousands of dollars in tax credits if they meet the qualifying criteria.
Missouri State Tax Credits
Dry Fire Hydrant Credit
The Dry Fire Hydrant Credit is designed to incentivize the installation of dry fire hydrants in rural areas. This credit is crucial for developers working in regions where traditional fire hydrants are not feasible. The credit covers the cost of installing these hydrants, enhancing fire safety and potentially reducing insurance costs for your developments.
Disabled Access Tax Credit (DAC)
The Disabled Access Tax Credit (DAC) encourages developers to make their properties accessible to individuals with disabilities. This credit can be applied to the costs of providing architectural and transportation barrier removal, making your properties more inclusive and compliant with the Americans with Disabilities Act (ADA).
Missouri Affordable Housing Assistance Program (AHAP)
The Missouri Affordable Housing Assistance Program (AHAP) offers tax credits to developers who construct or rehabilitate affordable housing. This program is essential for those aiming to provide housing for low-income families, ensuring your projects are financially viable while addressing critical housing needs in the community.
State and Federal Tax Credits
Low-Income Housing Tax Credit (LIHTC)
The Low-Income Housing Tax Credit (LIHTC) is one of the most significant federal and state programs for affordable housing development. It provides tax credits to developers who build or rehabilitate housing for low-income tenants. This program is critical for addressing the affordable housing crisis and ensuring that all community members have access to safe, affordable housing.
Historic Preservation Tax Credit Program (HTC)
The Historic Preservation Tax Credit Program (HTC) incentivizes the rehabilitation of historic buildings. HTC offers federal and state tax credits to developers who preserve and restore historic properties, ensuring these cultural assets remain integral parts of our communities.
Federal Tax Credits
Solar Investment Tax Credit (ITC) and Production Tax Credit (PTC)
Two types of tax credits, the Investment Tax Credit (ITC) and the Production Tax Credit (PTC), are available to commercial developments that purchase solar energy systems. The ITC reduces your federal income tax liability based on the percentage of costs incurred from a solar system installed during the tax year. The PTC grants you a per kilowatt-hour tax credit for any electricity generated by solar power or other qualifying technologies for the first 10 years the system operates.
Opportunity Zones
Opportunity Zones offer tax incentives for investments in economically distressed areas. By investing in these Qualified Opportunity Zones, developers can defer and potentially reduce capital gains taxes, making it a lucrative option for those looking to contribute to the economic revitalization of underserved communities.
Tax Credits for Energy-Efficient Building Designs
Developers committed to sustainable building practices can benefit from tax credits for energy-efficient building designs. Programs like the 179D deduction and the 45L tax credit provide incentives for constructing energy-efficient commercial buildings and residential properties, reducing both environmental impact and operating costs. Expanded by the Inflation Reduction Act of 2022, both programs allow developers who use prevailing wages, as set by the Department of Labor, to access the maximum deduction amount.
Navigating the array of tax credits available to real estate developers in Missouri can be complex, but the potential benefits make it well worth the effort. From state-specific credits like the Dry Fire Hydrant Credit and BUILD to federal programs such as the Brownfield Remediation Program and Opportunity Zones, these incentives can significantly enhance the financial viability of your projects.
Anders Real Estate and Construction advisors understand the intricacies of these programs and are here to help you leverage these opportunities to their fullest potential. To learn more about how we can help you navigate real estate development tax credits, and the associated cost, request a meeting with an advisor below.
