For more than three decades, the Federal Historic Tax Credit (HTC) has successfully implemented a national policy of preserving historic resources. It is the most significant investment the federal government makes toward the preservation of historic buildings. But, not only does this tax credit benefit communities and the preservation of history – this is a significant investment opportunity for banks.
In fact, HTCs are an asset class that banks, insurance companies and other large corporates have been investing in since 1986. These credits are generated by qualifying real estate developments, but many developers can’t use HTCs personally. This creates a market whereby investors can partner with these developers and earn tax credits.
Many large banks and financial organizations have learned to embrace tax credits as a method to reduce tax liability and earn a competitive return on capital. Benefits banks gain by partnering in one of these credits include:
- A return on their investment
- Investment may qualify for positive consideration in the Bank’s CRA evaluation
- Diversification in portfolio
- Protection against Alternative Minimum Tax (AMT)