In the closing days of the 112th Congress, Representative Keith Ellison (D-MN) introduced H.R. 6677, the Common Sense Housing Investment Act. The bill, introduced on December 18, would convert the mortgage interest deduction to a flat-rate 20% tax credit, cap the maximum mortgage to receive a tax break at $500,000 and direct the majority of the savings gained from these modifications to the National Housing Trust Fund.
Individual taxpayers can calculate how these proposed changes to mortgage interest tax policy would affect their taxes by using NLIHC’s housing tax reform calculator here.
In addition to funding the National Housing Trust Fund, H.R. 6677 would direct funding to the Section 8 program for both project-based and tenant-based assistance and to the Public Housing Capital Fund. It would also expand the Low Income Housing Tax Credit and make it easier to use to serve extremely low income families.
H.R. 6677 had one co-sponsor, Representative Bobby Scott (D-VA).
Mr. Ellison estimates that the savings from modification would be about $27 billion a year. The bill divides those savings as follows: $15.4 billion a year to the National Housing Trust Fund, $7.7 billion a year to the Section 8 program, $2.5 billion to the Public Housing Capital Fund and $1.4 billion to the Low Income Housing Tax Credit program. The bill would also allow state agencies that administer the Low Income Housing Tax Credit to give up to a 150% basis boost for LIHTC apartments that are targeted to extremely low income households (those with incomes at or below 30% of area median income).
In a December 20 press release, NLIHC President and CEO Sheila Crowley said, “We can end homelessness in the United States if we put enough money in the National Housing Trust Fund.” Further, she said, “gearing mortgage interest tax breaks more toward middle class and lower income homeowners will provide a tax benefit where it is needed most.”
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 increase is driven by making the tax break available to homeowners who are paying interest, but do not make enough money to itemize on their federal tax returns.
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.
The 112th Congress ends at noon on January 3, and all bills not enacted by the time of adjournment will no longer be active. Mr. Ellison is expected to reintroduce his bill in the 113th Congress. NLIHC will continue to work with Mr. Ellison to fine-tune his bill.
As of January 1, 701 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. Two new national organizational endorsers are the National Alliance of HUD Tenants and the Community Action Partnership.
Click here to see the list of endorsing organizations.
Click here to add your organization to the list of endorsers.
Learn more about NLIHC’s proposal at www.housingtaxreform.org.
Click here for the press release from Mr. Ellison’s office.
Click here for the NLIHC press release.
Click here for the full text of H.R. 6677.