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Tax Credits for Banks buoyed Boston area real estate - are others?

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  • Tax Credits for Banks buoyed Boston area real estate - are others?

    I wonder how many of the areas where Real Estate looks positive is seeing big investment inflows because of tax credits from the US Treasury.

    Boston real estate is booming and there are some decent industries in Boston, but the accelerant is Banks investing through Tax Credits - to reduce the Banks corporate income taxes.

    For example , Massachusetts Housing Investment Corp (a non-profit) has received and invested $891,000,000 in 2010 and $1 Billion in 2011 to build affordable housing and non-profit construction of real estate. Keep in mind that this is just one example of how CDFI non-profits are distorting the Real Estate markets of Boston area and New England.

    In 2010 - $652 Million was Housing Tax Credits from Banks (the granted by the US Treasury) and $210 Million in New Market Tax Credits. The Banks provided actual loans of $29 Million. Remember, the Banks get a Tax credit of approximately 30% of their investment when they invest with tax credits.

    In just two years Banks, through their use of New Market and Housing tax credits, have invested $2 Billion in Boston/New England area affordable housing and other real estate building. I'd be willing to guess that Mass Housing Investment Corp is on track with another $1 Billion in investing in Real Estate in Boston and New England. That would make $3 Billion of investment Money flowing into Boston and New England area just through one CDFI non-profit.

    Why would Banks lend with traditional loans when the can invest using Tax Credits and the Bank is assured of reducing their corporate income taxes. See page 37 for Breakout of Dollars per Bank - Bank of America, state Street, Fannie Ma