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Wyden Proposes New US Housing Tax Credit

by Scott Hamilton, Tax-News.cm, Washington

28 September 2016


US Senate Finance Committee Ranking Member Ron Wyden (D – Oregon) has released draft legislation that would create a new Middle-Income Housing Tax Credit (MIHTC), intended to boost the development of rental homes affordable to Americans with moderate incomes.

The new incentive is designed to work in conjunction with the Low-Income Housing Tax Credit (LIHTC), under which private sector developers of a project agree to set aside a certain percentage of housing units with rents that are affordable for at least 30 years for qualifying low-income households. In return, they can earn a tax credit over a 15-year period.

The new MIHTC would be aimed at developers and administered by states.

Under the legislation, the federal government would allocate tax credits to the states based on population. For 2017, the allocation would be USD1 per capita with a USD1.14m small state minimum. State housing authorities would then allocate the tax credits to developers through a competitive process.

The tax credits would also be provided to developers over a 15-year period. The credit amount would equal 50 percent of the present value of the qualifying costs, or five percent a year on an undiscounted basis. To qualify for the credit, at least 60 percent of the property's units must be occupied by individuals with incomes of 100 percent or less of Area Median Gross Income. Furthermore, tenants' rents must not exceed 30 percent of AMGI.

"In my state and nationwide, affordable housing is key to climbing the ladder of economic mobility," Wyden said. "The bottom line; America's housing policy needs a remodel. It should start by using proven tools to develop new homes for Americans earning low and moderate incomes. This new tax credit will work hand-in-hand with the tax credit for low-income housing, which has been a huge success for decades."

TAGS: individuals | tax | law | real-estate | tax credits | legislation | United States | Tax

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