Existing law establishes a low-income housing tax credit program pursuant to which the California Tax Credit Allocation Committee (CTCAC) provides procedures and requirements for the allocation, in modified conformity with federal law, of state insurance, personal income, and corporation tax credit amounts to qualified low-income housing projects that have been allocated, or qualify for, a federal low-income housing tax credit, and farmworker housing projects.
Existing law, beginning on or after January 1, 2009, and before January 1, 2020, requires, in the case of a project that receive a preliminary reservation of a state low-income housing tax credit, that the credit be allocated to the partners of a partnership owning the project in accordance with the partnership agreement, as provided. Existing law, beginning on or after January 1, 2016, and before January 1, 2020, authorizes a taxpayer that is allowed a low-income housing tax credit to elect to sell all or a portion of that credit to one or more unrelated parties for each taxable year in which the credit is allowed, as described.
This bill would delete the January 1, 2020, date with respect to both of these provisions, thereby requiring the allocation of credits among partners in accordance with the partnership agreement and authorizing the sale of a credit, as described above, indefinitely.
With respect to the sale of a low-income housing tax credit under these provisions, existing law authorizes the taxpayer to elect to sell all or a portion of the credit in its application to CTCAC. Existing law generally requires that this election be irrevocable, but allows the taxpayer, with the approval of the executive director of CTCAC, to rescind the election to sell if the consideration falls below 80% of the amount of the credit. Existing law also requires that an unrelated party that purchases any or all of a credit under these provisions be a taxpayer that is allowed a credit for the taxable year of the purchase, or was allowed a credit for a prior taxable year, a state or federal low-income housing tax credit and, except as provided, prohibits the unrelated party from reselling the credit to another taxpayer or other party.
This bill would instead authorize a taxpayer to make a one-time revocation of the election to sell all or any portion of a low-income housing tax credit at any time before CTCAC allocates a final credit amount for a project, at which point the election would become irrevocable. The bill would specifically prohibit a taxpayer from electing to sell all or any portion of a low-income housing tax credit if the taxpayer did not make that election in its application submitted to CTCAC. The bill would also delete the requirement that the unrelated party be a taxpayer that is allowed, or have previously been allowed, a state or federal low-income housing tax credit and the prohibition on the resale of a credit by the unrelated party.

Statutes affected:
SB9: 12206 RTC, 17058 RTC, 23610.5 RTC
12/03/18 - Introduced: 12206 RTC, 17058 RTC, 23610.5 RTC
04/03/19 - Amended Senate: 12206 RTC, 17058 RTC, 23610.5 RTC