The U.S. Congressional Joint Committee on Taxation (JCT) published a report, “Present Law and Background Relating to Tax Incentives for Residential Real Estate,” on July 13. The release of the report, which summarizes federal tax incentives for residential housing, coincided with the U.S. House of Representatives’ Committee on Ways and Means’ hearing “Nowhere to Live: Profits, Disinvestment, and the American Housing Crisis.” The report identifies and analyzes current federal tax incentives for homeownership and rental housing. Among the tax incentives analyzed by the report are the mortgage interest deduction (MID) – a tax break for homeowners – and the Low-Income Housing Tax Credit (LIHTC), the nation’s largest affordable rental housing production program.
In its discussion of MID, JCT cites evidence that MID disproportionately benefits higher-income homeowners and likely incentivizes the purchase of larger, more expensive homes while having little to no impact on increasing homeownership. Although they are not included in the report, JCT’s most recent estimates suggest that annual tax expenditures for MID are more than double those for LIHTC. According to these estimates, MID will account for $125.2 billion in tax expenditures compared to just $54.6 billion for LIHTC between fiscal year (FY) 2020 and FY2024.
Read the report at: https://bit.ly/3cwItys