Senate Finance Committee Chairman Ron Wyden, D-Oregon, introduced legislation Wednesday with tax credits aimed at ending homelessness and providing affordable housing.
The bill, dubbed the
The DASH Act aims to increase the production of affordable housing for families exiting homelessness and for low-income households by investing more in effective existing programs and in homeownership in underserved communities. Other provisions would provide families with Housing Choice Vouchers, and expand health care, child care, financial and nutrition services for families and individuals.
The legislation aims to address the growing problem of homelessness in the U.S., which has been exacerbated by the lack of affordable housing and the economic fallout from the COVID-19 pandemic and the highly transmissible Delta variant. The U.S. is experiencing a shortage of nearly 8 million units of affordable and available units for the lowest-income renters, according to estimates cited by Wyden’s office. Up to 15 million households spend over 50% of their take-home pay on rent each month. At least 550,000 Americans were homeless on any given night last year.
“Housing is a human right,” Wyden said in a statement Wednesday. “Yet millions of Americans pay more than half of their monthly take-home pay to keep a roof over their head. And more than half a million Americans don't have housing at all. ... It’s time America’s lawmakers get with the program and enact 21st century housing policies that adequately address 21st century challenges.”
The Down Payment Tax Credit for First-Time Homebuyers would provide a new $15,000 first-time home buyer tax credit that would be fully refundable and equal to 20% of the purchase price of a home. The credit would phase out above 110% of conforming loan limits and above $100,000 of income for single filers ($200,000 for joint filers). The credit could be recaptured if the taxpayer resells their home in under five years, with some exceptions.
The new Middle Income Housing Tax Credit would continue where the Low Income Housing Tax Credit program leaves off by offering a tax credit to developers who house tenants between 60% and 100% of area median income. The credit would equal 50% of the present value of construction costs, or 5% per year on an undiscounted basis. States would administer the program, and the Treasury would annually allocate the credit to states based on a $1 per capita formula with a $1.14 million small state minimum. States could also use MIHTC dollars to augment their LIHTC program.
The Renter’s Tax Credit would offer a refundable tax credit to property owners who rent to eligible tenants with incomes at or below 30% of area median income. The credit would equal up to 110% of the difference between market rent and utilities and 30% of the tenant’s income. Each year, the Treasury would allocate renters’ credits to states through a per capita formula. States in turn will allocate their credits to participating property owners who have signed a binding rent reduction agreement with eligible tenants. A state’s unused credits are returned to the national pool. Participating property owners would need to comply with the Fair Housing Act.
The legislation also includes the Emergency Affordable Housing Act, which would strengthen the LIHTC to weather the economic fallout from the pandemic, by preserving and protecting existing LIHTC properties, expanding production of affordable housing, and extending housing to people who earn extremely low incomes. Some of the main provisions of the EAHA would:
- Expand the 9% housing tax credit by 50% to house more families;
- Provide a 50% basis boost to projects that prioritize extremely low-income renters;
- Expand the 4% credit for rural areas;
Reduce the tax-exempt bond financing threshold for 4% credit projects from 50% to 25% for three years; and, - Preserve tens of thousands of affordable housing units by closing a loophole.
The EAHA is projected to produce nearly 1 million new affordable housing units over the next 10 years.
