Deal Structures
Tax Credits
Federal tax credit programs as capital stack tools. HTC, NMTC, solar ITC, 45L, and the mechanics of layering credits in a single deal.
Tax credits convert policy goals into investable equity. The federal historic rehabilitation credit, New Markets Tax Credit, solar investment tax credit, and Section 45L energy credit each create a distinct pool of capital with its own qualification rules, investor structures, compliance requirements, and exit mechanics. For the developer, they reduce the equity check. For the investor, they generate yield through credits and accelerated depreciation rather than operating cash flow. For both, the structuring complexity is the price of the subsidy.
These five articles cover the federal credit programs most relevant to institutional CRE. Each article walks through the IRC mechanics, the qualification tests, the investor structure, and a worked example showing how the credit flows through a capital stack. The final article covers layering: which credits combine, which do not, and how twinning and dual-investor structures work when a single project qualifies for more than one.
5 articles
Historic Tax Credits and Qualified Rehabilitation Expenditures: A Practitioner's Guide to the 20% Federal Rehabilitation Credit
IRC Section 47 mechanics, QRE categories with qualifying vs non-qualifying expenditures, the substantial rehabilitation test, NPS Part 1/2/3 certification, five-year ratable credit claim, basis adjustment under IRC 50(c), and a worked $15M office rehabilitation capital stack.
Read article →New Markets Tax Credits (NMTC): How the Leveraged Structure Works and Why It Generates More Subsidy
IRC Section 45D mechanics, the four-party leveraged structure step by step, QEI/QLICI/CDE/QALICB definitions, the 39% credit over seven years, net benefit calculation, compliance period and exit/unwind mechanics, and a worked $10M community facility example.
Read article →Solar ITC for Commercial Real Estate: Section 48E Credits, Bonus Adders, and MACRS Interaction
Section 48E mechanics, base credit vs prevailing wage multiplier, domestic content and energy community bonus adders, MACRS 5-year depreciation with the half-credit basis reduction rule, direct pay for tax-exempt entities, and a worked 500 kW rooftop solar example.
Read article →Section 45L Tax Credit for Multifamily New Construction: Credit Amounts, Certification Paths, and Pro Forma Impact
IRC Section 45L mechanics, Energy Star MFNC vs DOE ZERH certification paths, credit amounts from $500 to $5,000 per unit, prevailing wage 5x multiplier break-even, interaction with cost segregation, the June 2026 sunset, and a worked 200-unit development example.
Read article →Layering Multiple Tax Credits: How to Combine LIHTC, HTC, and NMTC in a Single Deal
The federal tax credit compatibility matrix, LIHTC+HTC twinning mechanics and basis adjustment, single vs dual investor structures, HTC+NMTC combinations, why LIHTC and NMTC do not stack, state credit layering, and a worked $25M historic mill adaptive reuse example.
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