For income tax years commencing on or after January 1, 2019, but prior to January 1, 2023, the bill creates a state income tax credit for a donation of cash or securities a taxpayer makes to an eligible developer to be used solely for the costs associated with an eligible project.
The bill defines 'eligible developer' to mean, in part, a nonprofit community-based home ownership development organization that satisfies specified requirements relating to its background in the field of housing development and is developing or plans to develop the eligible project that is or will be receiving the donations for which the tax credits may be claimed. The bill defines 'eligible project' to mean the development of new residential housing for home ownership consisting of one or more residential units constructed for sale to a buyer whose median income is 120% or less of the area median income and for which each unit sold is to be preserved as affordable housing for a minimum of 15 years by means of a specified deed restriction or long-term land use. In order to be designated as an eligible developer authorized to accept donations, a nonprofit community-based home ownership development organization must satisfy certain criteria as created and evaluated and as may be amended by the Colorado housing and finance authority (authority).
The amount of the credit allowed by the bill is 50% of the amount of the money or the value of the securities donated to the eligible developer as documented in a form and manner acceptable to the department of revenue (department); except that the aggregate amount of the credit awarded to any one taxpayer under the bill is limited to $250,000 in any one income tax year.
The aggregate amount of tax credits certified is limited to $1.5 million for each tax year beginning January 1, 2019, but prior to the tax year beginning January 1, 2023.
If the amount of the credit allowed exceeds the amount of the taxpayer's income tax liability in the income tax year for which the credit is being claimed, the amount of the credit not used as an offset against income taxes in such income tax year is not allowed as a refund but may be carried forward and applied against the income tax due in each of the 5 succeeding income tax years, but must first be applied against the income tax due for the earliest of the income tax years possible.
A tax credit allowed by the bill is neither transferable nor assignable to any other taxpayer.
In order to claim the credit, the donation the taxpayer provides to obtain the credit must be accepted by the eligible developer to whom it has been given and certified by the authority. The authority is required to certify each donation. The authority completes certification by providing a certificate to the taxpayer in a format acceptable to the department evidencing that the certification requirements of the bill have been met. The authority is permitted to charge and collect an administrative fee from each applicant to recover program administration costs and expenses.
A taxpayer claiming the credit must submit, maintain, and record any information that the department may require by rule regarding the taxpayer's donation to the eligible developer, including the certificate received from the authority. A taxpayer is required to electronically file with the department the certificate the taxpayer receives from the authority.
Not later than January 15 of each year immediately following the year in which the authority certifies a tax credit, the authority is required to provide the department with an electronic report on the taxpayers who have received a credit for the calendar year that conforms to the income tax year for which the credit is allowed. The bill specifies information the report must contain.
The tax credit is repealed, effective July 1, 2030.
(Note: This summary applies to the reengrossed version of this bill as introduced in the second house.)