Senate Finance Committee Ranking Member Ron Wyden (D-OR) has announced plans to introduce a tax credit in September for the development of workforce housing. NMHC and NAA are providing feedback to Senator Wyden’s staff on a program he describes as being modeled after the existing Low-Income Housing Tax Credit (LIHTC), but targeting families who find themselves in-between earning too much to qualify for the LIHTC yet not making enough to reasonably afford housing. We expect to strongly support the proposal when it is released given the nation’s vast shortage of workforce housing.
Specifically, Senator Wyden said the tax credit will be modeled after LIHTC, “the Federal Government’s highlight successful program that encourages the development and rehabilitation of affordable rental housing for low-income families, and picks up where this program ends, helping middle income Americans.”
LIHTC and Affordability
In his role as a true champion for the multifamily industry, Senator Wyden joined Senator Maria Cantwell (D-WA) and Senate Finance Committee Chairman Orrin Hatch (R-UT) as an original cosponsor of the Affordable Housing Credit Improvement Act of 2016. NMHC and NAA support this comprehensive bill introduced July 14 that expands and strengthens the LIHTC in order to help ensure affordable housing.
This legislation would raise the cap on the LIHTC allocation authority by 50 percent, create a minimum 4 percent LIHTC rate for acquisition and for Housing Bond-financed properties, and permit income averaging within LIHTC properties to provide more flexibility. Additionally, it would make numerous programmatic modifications to strengthen and streamline the LIHTC, support the preservation of existing affordable housing and facilitate the housing credit’s development in challenging markets.
Senator Wyden is also a long-time supporter of like-kind exchanges. They play a critical role in supporting the multifamily industry by enabling investors to remain invested in real estate while still allowing them to balance their investments to shift resources to more productive properties, change geographic location, or diversify or consolidate holdings. They do this by allowing investors to defer capital gains taxes if, instead of selling their property, they exchange it for another comparable property.
Finally, in a nod to the single-family market, Senator Wyden in July introduced legislation that would provide a refundable tax credit of 2.5 percent of the cost of a home for first-time homebuyers. The credit, which would be worth a maximum of $10,000, would be phased out for single filers earning over $80,000 and married couples earning over $160,000. NMHC/NAA will be analyzing this proposal to determine the impact on the multifamily industry.