The Community Renewal and New Markets Act of 2000"
The House of Representatives has approved this bipartisan piece of legislation that will designate 40 "renewal communities" across the U.S. based on their poverty rate, unemployment rate, and median income, eight of which have to be in rural areas. An area will be designated in Washington D.C. beginning in 2003 regardless of the qualifications for a "renewal community". These areas will offer substantial tax breaks for homeowners and investors. Starting July 1st, 2001 to December 31st, 2009, a nominated renewal community will be eligible for these tax incentives:
- $0 in capital gains tax on property or assets that you buy during this period and hang on to for at least five years before selling it
- 15% wage credit for employers on the first $10,000 of an employees pay who lives in the community, works in the business located within the community and performs all services here
- You enter into a "commercial revitalization expenditure" that would allow you to deduct up to 50% on the costs of repairing a building and putting it into service for that tax year or all the estimated expenses during June 30, 2001, and before January 1, 2010
- You can deduct an additional $35,000 under section 179 for a qualified property that you put into service in your renewal community business during June 30, 2001 and January 1, 2010
- Expansion of the Work Opportunity Tax Credit for individuals that live in that community
- New markets tax credit on buying stock in a community development entity (serves and provides investment capital for low income communities and individuals). The credit is 5% for the equity interest in first year and the same for the next two year and then it jumps to 6% for the next four years. The cap on the equity investment begins at $1 billion in 2001 to $3.5 billion by 2007
- Low income housing tax credit which caps at $1.35 per resident in 2001 will be increased to $1.75 by 2006. States with less population are given a minimum of $2 million annual credit cap
- The bill will also accelerate the phase in of increase in the private activity bond volume cap starting in 2001 with $55 per resident ($165 million if greater) to $75 per resident ($225 million if greater) by 2007.