Community Development Innovation Review

April 2009

Using New Markets Tax Credits to Mitigate the Impact of Foreclosures on Communities


Across the country, committees have been established to come up with ways to mitigate the impact of foreclosures on lower-income communities. A few are exploring the feasibility of having community-based organizations use the New Markets Tax Credit (NMTC) Program to facilitate the purchase of foreclosed residential properties for rehabilitation and resale to low- and moderate-income families. In theory, these organizations could use the tax credits to help recover their costs for purchasing, fixing up, and selling homes at a price that is affordable to lower-income buyers. Moreover, the tax credits could help community-based organizations attract appropriate amounts of capital to conduct transactions at a scale that would stem disinvestment in troubled neighborhoods.