Creating a homeownership development tax credit available for charitable contributions to certain low-income housing developers in this state, and including retroactive applicability provisions

This bill creates a homeownership development tax credit that will be administered by the economic development authority (EDA) and that will provide tax credits to taxpayers who make charitable contributions to eligible housing developers or eligible rural housing developers in this state. An “eligible housing developer” is defined in the bill to include an Iowa nonprofit, tax-exempt organization that has been developing single-family housing for at least three years in this state to be sold to low-income households, as defined in the bill, that includes the development of such housing in this state for low-income households as a purpose in its bylaws or other organizational documents, and that agrees to provide EDA with certain information in order to properly verify charitable contributions. An “eligible housing developer” also includes an Iowa nonprofit, tax-exempt organization whose purpose is to support an organization described above and who redistributes any charitable contributions received on behalf of that eligible housing developer to the developer. An “eligible rural housing developer” is defined in the bill to include an Iowa nonprofit, tax-exempt organization that meets the requirements of an eligible housing developer described above but that additionally has conducted for the last three years at least percent of its housing development activities in Iowa counties with a population of fewer than 50,000 as determined by the most recent federal decennial census. An organization must apply to EDA to be certified as an eligible housing developer or an eligible rural housing developer. A certification by EDA will last for a period of three years, at which time an eligible housing developer or eligible rural housing developer may apply to be recertified. Failure to meet the requirements specified above may cause the organization to lose its certification as an eligible housing developer or eligible rural housing developer, but the loss of such certification does not prohibit an organization from subsequently reapplying to EDA for certification. In order to receive a tax credit for a charitable contribution to an eligible housing developer or eligible rural housing developer, a taxpayer is required to apply to the developer in the manner and form prescribed by EDA on or after the date the charitable contribution is made. The developer is then required to forward the application to EDA. The tax credit equals percent of the amount of the cash or noncash charitable contribution made to the eligible housing developer or eligible rural housing developer during the tax year. The minimum amount of charitable contribution that may qualify for the tax credit is $500, but each eligible housing developer or eligible rural housing developer is allowed to set a higher minimum contribution amount. The bill provides that EDA shall not issue more than $7 million in tax credits per calendar year.4 million) of the tax credits shall be reserved for charitable contributions to eligible rural housing developers. The maximum amount of tax credits that may be issued per taxpayer for charitable contributions in a tax year is $250,000, or $300,000 if at least percent of the taxpayer’s total charitable contributions to the eligible housing development organizations during the tax year were to one or more eligible rural housing developers. The tax credit may be claimed against the individual income tax, the corporate income tax, the franchise tax, the insurance companies tax, and the moneys and credits tax. To claim a tax credit, a taxpayer must include a tax credit certificate with the taxpayer’s tax return. The tax credit is nonrefundable and nontransferable, but any excess may be carried forward for five tax years. The amount of the charitable contribution for which the tax credit is claimed shall not be deductible in determining taxable income for state tax purposes. EDA is required to issue tax credits on a first-come, first-served basis until the maximum amount of $7 million per calendar year is reached. If the amount of tax credit applications exceeds $7 million in a calendar year, EDA is required to establish a wait list and give priority in subsequent years to applications on the wait list. The bill requires EDA and the department of revenue to adopt rules as necessary for the implementation of the bill, and requires EDA to publish and submit annual reports to the governor and general assembly containing information as described in the bill. The bill applies retroactively to tax years beginning on or after January 1, 2021, and applies retroactively to charitable contributions to eligible housing developers and eligible rural housing developers on or after that date.