Montana State Tax Credits for Affordable Rental Housing Development
Yes, Montana offers several tax credit programs to encourage the development of affordable rental housing. Here are the main programs available:
Montana Housing Tax Credit Program
- Administered by Montana Housing, part of the Montana Department of Commerce
- Provides federal Low-Income Housing Tax Credits (LIHTC) worth up to 9% annually for 10 years
- Requires properties to maintain affordable rents for at least 30 years
- Must reserve units for residents earning 60% or less of area median income
Montana Historic Tax Credit
- 5% state tax credit for qualified rehabilitation expenses
- Can be combined with 20% federal historic tax credit
- Available for certified historic structures
- No cap on credit amount
New Markets Tax Credit (NMTC)
- Federal program that can be used in Montana
- 39% tax credit spread over 7 years
- Must be in qualified low-income census tract
- Can be combined with other credits
Frequently Asked Questions
Q: Who can apply for these tax credits?
A: Developers, property owners, and investors who create or rehabilitate affordable rental housing in Montana.
Q: What is the application process?
A: Applications are submitted to Montana Housing during annual funding rounds with detailed project proposals.
Q: Are there minimum unit requirements?
A: Yes, projects typically need at least 20 units to be financially viable with tax credits.
Q: Can credits be sold or transferred?
A: Yes, credits can be sold to investors through syndication to raise development capital.
Q: How competitive is the program?
A: Very competitive – Montana typically receives 3-4 times more applications than available credits.
Q: What are the compliance requirements?
A: Properties must maintain affordable rents and income restrictions for 30+ years with annual reporting.
Q: Can these credits be combined with other programs?
A: Yes, they can be combined with historic credits, HOME funds, and other financing sources.
The Bottom Line
Montana offers valuable tax credit opportunities for developing affordable rental housing through federal and state programs. While the application process is competitive and complex, these credits can provide significant financial benefits to help make affordable housing projects viable. Success requires careful planning, professional guidance, and a long-term commitment to maintaining affordable units.