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New Markets Tax Credit Calculator
NMTC provides 39% tax credit stream for low-income community investment.
Total 7-yr credit (39%)
$3,900,000
This year credit
$500,000
Total syndicated value
$3,315,000
How the math works
Years 1-3: 5% each. Years 4-7: 6% each. Total 39%. Syndicated = total × yield.
$10M × 5% = $500k year 1-3. $600k years 4-7. Total $3.9M × $0.85 = $3.32M syndicated value.
How to Use
- Enter Qualified Equity Investment (QEI).
- Enter credit year (1-7).
- Enter investor tax rate %.
- Read credit schedule + total.
Frequently Asked Questions
What is NMTC?
New Markets Tax Credit: 39% federal credit over 7 years for investment in qualified CDE (Community Development Entities) that invest in qualified businesses in low-income communities. Year 1-3: 5% annually; Year 4-7: 6% annually. Total 39%. CDEs deploy capital via loans or equity to qualifying businesses (incl real estate). Created 2000 for community development.
What qualifies?
Low-income community: census tract with <80% AMI or >20% poverty. NMTC-eligible activities: real estate acquisition, construction, rehab. Operating business investments. Must meet 'flexible' underwriting (below-market rates or reduced equity requirement). Projects meet 'community impact' criteria: job creation, services to low-income community, economic development. Experienced CDE syndicator essential.
Structure?
Complex 7-year structure. Investor makes QEI to CDE. CDE makes Qualified Low-Income Community Investment (QLICI) — typically a loan or equity to operating business. Over 7 years, investor receives 39% credit stream. At year 7, 'unwinding' — investor exits. Structure requires complex legal agreements, specialized accounting, long-term tracking. Not for amateur operators.
Typical economics?
QEI raised: 90-95% of project's NMTC-eligible cost. CDE takes 3-5% fee. Investor net after-tax yield: 6-9% IRR. Business receives below-market loan (typically 300-500 bps below market) at net zero cost via flexible structuring. Complex but powerful subsidy for community development. Common in historic rehabs, affordable multifamily, manufacturing, hospitals, charter schools.
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