Retirement & Financial Planning Report

Federal housing partnerships provide housing for low-income tenants and tax credits for investors. If you’re in the 31% tax bracket, a $3,000 deduction saves you $930 while a $3,000 credit saves you $3,000. Every $10,000 invested likely will generate about $1,000 per year in tax credits. The credits run for 10 years but it may actually be 12 years before they’re all used because of the time it takes to develop some properties and rent them out.


Thus, you’re likely to break even from the tax credits alone, over 10 years or more. Eventually, you may receive additional returns if the partnership refinances or sells its properties. These deals are so attractive, there are limits to the use of federal housing credits. You can effectively invest from $70,000 to $100,000 per year, in order to claim $7,000-$10,000 per year in tax credits. You can invest less: minimum investments are generally $5,000. Partnerships from companies such as Boston Capital (617/624-8900) and WNC & Associates (714/662-5565) are sold by many brokers and financial planners.