Senate Finance Committee Chairman Ron Wyden (D-Ore.) on August 18 unveiled legislation that would expand tax credits for housing production and establish a renter’s tax credit. The Decent, Affordable, Safe Housing for All (DASH) Act, which will be formally introduced when the Senate reconvenes in September, among other provisions, would:
- Enhance the Low-Income Housing Tax Credit (LIHTC) by:
- Making permanent the 12.5 percent increase in LIHTC effective for 2018-2021, as well as increasing credit authority by an additional 50 percent;
- Reducing to 25 percent from 50 percent the amount of a project that must be financed using tax-exempt bonds in order to access 4 percent LIHTCs. The provision would be effective for buildings financed by obligations issued in 2021, 2022, 2023, or 2024 and placed in service in taxable years after 2021.
- Establish a Middle-Income Housing Tax Credit (MIHTC):
- MIHTC would pick up where LIHTC leaves off by helping to finance apartments for families earning between 60 percent and 100 percent of area median income (AMI). Allocated to developers in a competitive process, the tax credits would be paid out over 15 years and finance 50 percent of project costs. Properties would have to remain affordable for up to 15 years following the initial compliance period with 60 percent of units serving families earning under 100 percent of AMI.
- Launch a Renter’s Tax Credit:
- The Act would provide a refundable renter’s tax credit to taxpayers owning rental property serving residents earning 30 percent or less of AMI or at or below the poverty line, whichever is greater. The tax credit would be 110 percent (up to 120 percent for low-poverty neighborhoods) of the difference between market rent and 30 percent of household income. The credit would be allocated to states ($12.15 billion would be provided in the aggregate to states each year based on population), which would, in turn, provide the credit to participating taxpayers.
Notably, the DASH Act would also establish a new set aside voucher pool for individuals and families making 50% or below of Area Median Income either experiencing homelessness or at risk of being homeless. This new set aside would substantially expand the HCV program over a period of time by a defined number of vouchers (400,000), which is different from the existing voucher program that is based on a dollar figure budget. The new voucher set aside would also apply source of income protections for recipients, which has no precedent in federal law and has been opposed by property owner/managers in a number of states and local jurisdictions.
While NMHC and NAA have concerns about the unprecedented and potentially disruptive changes to source of income treatment in the Housing Choice Voucher Program, the industry strongly supports the DASH Act’s expansion of the LIHTC and the establishment of MIHTC.
The multifamily industry has long called for enhanced tax incentives to generate additional housing supply as a means of alleviating the housing affordability challenges confronting the nation. As Congress considers so-called “human infrastructure” reconciliation legislation later this year, these provisions would represent a positive step forward.
For more information on NMHC’s advocacy work in this space, please visit the NMHC tax and accounting topic page.
- Sharon Wilson Géno Written Testimony on Behalf of the NMHC and NAA to the Senate Committee on Finance Hearing Entitled Tax Policy’s Role in Increasing Affordable Housing Supply for Working Families
- Middle-Income Housing Tax Credit (MIHTC) Fact Sheet
- Low-Income Housing Tax Credit
- IRS Proposed Regulations Real Estate Letter
- NMHC-NAA Senate Banking State of Housing Market Hearing Letter