Have you ever wondered who gets those tax credits listed on our Vermont Individual Income Tax forms?

Here’s who: investors in the Vermont Community Loan Fund.

You can take advantage of the Vermont Charitable Housing Tax Credit when you invest in the Loan Fund to support affordable housing. It's so simple: almost a quarter of our investors qualified to receive the Credit last year.

Here's how it works:

Effective July 1st, 2010, the State of Vermont set the Charitable Threshold Rate at 1.25%.* As a result, whenever you invest with us at a rate lower than 1.25%, you'll earn a tax credit equal to the difference between the rate of your investment and 1.25%. For instance, if your VCLF investment has a 0% interest rate, you'll receive the full 1.25% credit. If your VCLF investment has a 1% return on investment, you'll qualify to receive a 0.25% income tax credit based on the amount of your investment.

Since you're receiving a credit (as opposed to a refund), that benefit is completely untaxed. This means that after taxes, the benefit you will have received will be greater than the amount you would have received with an investment with us at an equivalent rate. An example: If your taxable household income was $100,000 in 2008, you paid combined federal and state income tax at a marginal rate of 32.2%. At this tax rate, a 1.25% tax credit is equivalent to earning a 1.85% return on a bank CD!

You can maximize your investment's benefit by investing at zero percent. Almost 90% of our investors receiving the CHTC last year chose to invest at 0%. This lower rate allows VCLF to keep our borrowers' rates low, which can make a huge difference in the rent a family pays for their apartment or the purchase price a family pays for their first home.

We like to think of the Charitable Housing Tax Credit as a "win-win-win."

• You win. You receive the highest possible rate of return for your investment in the Loan Fund.
• We win. VCLF pays a lower cost of funds, allowing us to lend at a lower cost to the borrower.
• Vermont wins. The state leverages private capital to meet a public need, creating safe, affordable homes for lower-income Vermonters.

Join us and take advantage of this powerful tool provided by the state to create more affordable housing opportunities. Contact Jake Ide, Director of Development, at (802) 223-4423 today.

* These rates are subject to change every July 1st. The Vermont Community Loan Fund does not provide tax advice. Please consult your tax advisor to determine how the Charitable Housing Tax Credit can benefit you.