Tax reform — specifically, changes to the mortgage interest deduction — could generate billions in savings that could make housing more affordable for extremely low income households through programs such as Section 202 Supportive Housing for the Elderly, according to a new report released Thursday by the National Low Income Housing Coalition.
“The GAP: A Shortage of Affordable Homes” found a shortage of 7.4 million affordable and available rental homes for renters whose incomes are at or below 30% of the median income in the area where they live, or the poverty guideline. The study also found that 35 affordable and available units exist for every 100 extremely low income renter households nationwide and that 71% of extremely low income renter households spend more than half of their income on housing.
The NLIHC-led United for Homes campaign proposes reducing the amount of a mortgage eligible for a tax benefit from $1 million to $500,000 and converting the deduction to a non-refundable tax credit. “These two reforms, phased in over five years, would generate $241 billion in new revenue over 10 years to invest in affordable housing programs,” the report authors wrote.
Moreover, according to the report, few homeowners would be affected by the reduction to $500,000, and converting the deduction to a tax credit would provide a tax cut for almost 25 million current homeowners who do not itemize their deductions or get the full benefit of the deduction.
The report, based on 2015 American Community Survey data from the U.S. Census Bureau, presents the availability of affordable homes for renter households in each state, the District of Columbia and the 50 largest metropolitan areas.
The supply ranges from 15 affordable and available homes for every 100 extremely low income renter households in Nevada to 61 in Alabama. Other states where extremely low income renters face the greatest challenges finding affordable homes are Arizona, California, Colorado, Florida and Oregon.
The metropolitan areas with the highest number of units affordable and available per 100 renter households were Oklahoma City and Kansas City, MO/KS, with 38 each. The metropolitan area with the lowest number of units affordable and available per 100 renter households was Las Vegas–Henderson–Paradise, NV, with 12.
Coincidentally, the report was released the same day as former pediatric neurosurgeon Ben Carson was confirmed as secretary of the Department of Housing and Urban Development.
NLIHC President and CEO Diane Yentel said in a statement that her organization “looks forward to working with him to ensure that the lowest income people in America have decent, accessible and affordable homes.”
NLIHC has posted Carson’s responses to the organization’s top 10 questions online.