CHAMP Funds, or Competitive Housing Assistance for Multifamily Properties, is an initiative developed by the Connecticut Department of Housing (DOH) that provides gap funding to owners of existing developments and developers of proposed new developments to increase the supply of safe, decent and affordable housing in Connecticut. Investors intent on acquiring or refinancing affordable properties with HUD 223(f) loans in Connecticut sometimes decide to use CHAMP loans and grants as a supplemental source of financing.

The CHAMP program may be combined 4% low income housing tax credits (LIHTCs), which allow investors to claim a 10-year deduction on their federal tax returns. To learn more about the CHAMP program, visit the Connecticut Department of Economic and Community Development here.

The benefits of investing in CHAMP Funds include gap funding to increase the supply of safe, decent and affordable housing in Connecticut, the potential to combine 4% low income housing tax credits (LIHTCs), and the ability to defer capital gains taxes until the investment is sold or by December 31, 2026, whichever occurs first. Additionally, investors who keep their money in an Opportunity Fund for at least 5 years will receive a 10% reduction of their capital gains tax liability, while those who keep their investment in the fund for at least 7 years will receive an additional 5% discount, for a total 15% capital gains tax discount. And, in what may be the most appealing element of Opportunity Fund investing, investors who keep their money in an Opportunity Fund for at least 10 years will not have to pay any capital gains taxes on any additional appreciation their investment has experienced since it was placed in the fund.

CHAMP Funds can be used to provide gap funding for existing developments and proposed new developments to increase the supply of safe, decent and affordable housing in Connecticut. Investors intent on acquiring or refinancing affordable properties with HUD 223(f) loans in Connecticut sometimes decide to use CHAMP loans and grants as a supplemental source of financing. CHAMP Funds can also be combined with 4% low income housing tax credits (LIHTCs) to allow investors to claim a 10-year deduction on their federal tax returns.

CHAMP Funds can be used to invest in real estate, such as new construction or rehabilitation projects, as well as businesses located inside a Qualified Opportunity Zone. However, businesses must not be in a prohibited category, such as liquor stores, massage parlors, gambling-related businesses, golf courses, tanning salons, and several other types of “sin” businesses. In addition, the business must do at least 70% of its business inside the Opportunity Zone in order to qualify.

The risks associated with investing in CHAMP Funds include the potential for gap funding to not cover the full cost of the project, the need to combine CHAMP Funds with other sources of financing such as 4% low income housing tax credits (LIHTCs), and the potential for the Connecticut Department of Housing (DOH) to change the terms of the CHAMP program. Additionally, investors should be aware that the CHAMP program may not be suitable for those with a short-term investment horizon, as the tax benefits of the program are only available after a 10-year period. For more information, visit the Connecticut Department of Economic and Community Development here.

CHAMP Funds, or Competitive Housing Assistance for Multifamily Properties, is an initiative developed by the Connecticut Department of Housing (DOH) to increase the supply of safe, decent and affordable housing in Connecticut. To learn more about the CHAMP program, visit the Connecticut Department of Economic and Community Development here.