Middle-Income Housing Tax Credit

The bill creates a pilot program for an income tax credit for owners of qualified housing developments focused on rental housing for middle-income individuals and families. Middle-income individuals and families are those individuals and families with an annual household income between 80% and 120% of the area median income of the households of the same size in the county in which the housing development is located; except that, for rural resort counties, the annual income is between 80% and 140% of the area median income of the households of the same size in the county in which the housing development is located.

During the calendar years commencing on January 1, 2025, and ending on December 31, 2027, the owner of a qualified housing development may be allocated a credit by the Colorado housing and finance authority (CHFA). The amount of the credit is determined by CHFA. The allocation of credits must follow CHFA's published allocation plan, and the aggregate amount of credits allocated in one calendar year cannot exceed $10 million. The allocated credit amount may be used to offset a qualified taxpayer's income taxes each year for a period of 5 years, beginning in the year that the qualified housing development is placed in service. Although the credit may only be claimed for a 5-year period, the owner is required to provide middle-income housing in the qualified housing development for 15 years. A portion of the credit may be recaptured under certain conditions, for instance when the owner reduces the number of units serving middle-income individuals and families. In addition, the credit is allowed against insurance premium taxes for eligible taxpayers that are not subject to income taxes.

The bill also requires CHFA to annually report on the middle-income tax credit pilot program to the general assembly and to make the report publicly available.

(Note: This summary applies to this bill as introduced.)