LIHTC Recapture Bonds

Providing Assurance to Tax Credit Investors in the Affordable Housing Industry

For years, the IRS required a bond (IRS form 8693) to avoid tax credit recapture in the event of ownership disposition in a Low Income Housing Tax Credit Section 42 project. Now that the IRS requirement is no longer in place, we know that many tax credit investors or limited partners are hesitant to allow a change in ownership during the tax credit compliance period and are looking for some form of collateral. The LIHTC Recapture Bond enables our team of Bond Specialists to provide assurance to the tax credit investor that the property will remain in compliance with Section 42 of the IRS code and that they will be protected against tax credit recapture and interest penalties.

Scott’s Affordable Housing Practice Group has chosen to partner with an international surety company to develop this exclusive surety product to protect against any non-compliance penalties that may arise after disposition. The surety is rated A “Excellent” by AM Best and has a financial size of “XV” ($2 Billion or Greater). It is listed on the U.S. Department of Treasury’s list of certified companies.

Our LIHTC Recapture Bond Guarantees:

• Quick, simple, & straightforward underwriting process
• Affordable, flat annual premium rates that are not cost-prohibitive
• Assurance backed by an international, A “Excellent” Rated Insurance Company
• Flexibility for General Partners as to the timing of the sale

 

---

 

Affordable Housing Practice

We are dedicated to serving as a trusted partner to our clients. Our expertise helps organizations manage their unique risks, and allows them to focus on their mission of improving lives and communities.

About the Practice