Friday, December 21, 2012

Tax reform that builds affordable housing

Here is a press release from the National Low-Income Housing Coalition on a proposed change in the mortgage deduction that looks like it could both help middle-class homeowners and the homeless:

The National Low Income Housing Coalition (NLIHC) today announced that it supports legislation to address the affordable housing needs of low and middle income American families through mortgage interest deduction reform and funding the National Housing Trust Fund

The Common Sense Housing Investment Act (H.R. 6677), introduced December 18 by Representative Keith Ellison (D-MN), would convert the mortgage interest deduction to a flat rate 20% tax credit and cap the maximum mortgage to receive a tax break at $500,000. H.R 6677 would direct the majority of the savings gained from these modifications to the National Housing Trust Fund. Mr. Ellison estimates that the savings would be about $27 billion a year.

“Gearing mortgage interest tax breaks more toward middle class and lower income homeowners will provide a tax benefit where it is needed most,” NLIHC President and CEO Sheila Crowley said. “Representative Ellison’s bill would allow all homeowners with mortgages to receive a tax break, not just those who have enough income to file itemized tax returns.”

Under this proposed change, the number of homeowners with mortgages who would benefit from the tax break would increase from 43 million to 60 million, with 92% of the increase being households with incomes less than $100,000 a year.

The National Housing Trust Fund was established by Congress in 2008, but has yet to be funded. Its purpose is to reduce the shortage of rental homes that are affordable for the lowest income families.
Nationwide, for every 100 households with incomes in the bottom 30% of income, there are only 30 rental homes that are affordable and available to them. Once funded, the National Housing Trust Fund will provide grants to states to build, preserve, rehabilitate, and operate rental housing that these households can afford.

“Funding the National Housing Trust Fund would create thousands of jobs in the construction trades. We can end homelessness in the United States if we put enough money in the National Housing Trust Fund,” said Crowley.

In addition to providing funding for the National Housing Trust Fund, H.R 6677 would expand the Low Income Housing Tax Program and increase funding for HUD’s Section 8 and public housing programs.

Over 600 national, state and local organizations have endorsed NLIHC’s proposal to reform the mortgage interest deduction and use the savings to fund the National Housing Trust Fund.

Individual taxpayers can calculate how these proposed changes to mortgage interest tax policy would affect their taxes by the housing tax reform calculator at

Learn more about NLIHC’s proposal at

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