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4D Tax Incentive Program - Minnesota

How It Works

The deal is simple: Apartment operators qualify for a significant discount on their annual tax rate as long as they commit to keeping a certain percentage of their units affordable. Effectively, this bill transforms the usual 1.59% tax on assessed value to a reduced rate of 0.25%. To meet the criteria, rents must stay below a specified threshold, and tenant incomes must be verified and maintained at or below 60% of the average median income. The real investment opportunity lies in properties where these criteria naturally align. A prime example is our 45-unit portfolio, Minnehaha Properties. Let’s take a look at the numbers.

Located in Minneapolis’ Longfellow neighborhood, Minnehaha Properties consists of 34 one-bedroom and 11 studio apartments. Currently, one-bedroom units are rented at around $1,000, and studios at $875. Complying with the 4d program still allows for potential increases, with one-bedroom rents reaching up to $1,400 and studios up to $1,305. This indicates ample room for rent growth both now and in the future. The maximum rents permitted under the program are adjusted annually to accommodate inflation.

At Minnehaha Properties, our property taxes, calculated at the 1.59% rate, total $70,668 annually. Following the recent approval of the 4d program, we anticipate a remarkable reduction, with property taxes amounting to just $12,719 per year at a rate of 0.25%. This translates to significant annual savings of $57,949 for the property. What makes this even more favorable is that our residents naturally qualify for this program, eliminating the need for any adjustments to our tenant profile.

Bonus Benefits

Beyond the tax incentives, the program offers benefits in the form of grants for implementing eco-friendly upgrades, such as energy-efficient windows, boilers, and water heaters. These grants contribute to the overall sustainability and efficiency of our properties. By leveraging these opportunities, we can simultaneously benefit from cost savings and a modernized housing portfolio.

Expanding 4d Advantages

We're expanding our participation in the 4d housing incentive program to include not just Minnehaha but several other properties. When implemented across our portfolio this strategic move is expected to result in an annual saving of close to $200,000 in property taxes. Our involvement in the 4d program is a significant milestone as it not only enables us to secure substantial tax savings but also unlocks additional perks, including grants for eco-friendly upgrades. This forward-thinking approach aligns with our commitment to providing affordable housing solutions, all while maximizing returns for our valued investors.

If you're interested in joining us on this journey, we encourage you to schedule a call or explore our investment portal to learn more about our future investment opportunities.

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