Rep. Keith Ellison (D-MN) this week introduced the Common Sense Housing Investment Act (H.R. 6677) to make it easier for middle class and working families to be able to stay in their homes and find affordable rental housing. The bill realigns the mortgage interest deduction to better benefit families who need it most by converting the deduction to a 20% flat rate tax credit on mortgages up to $500,000. The bill strengthens the tax benefits for homeowners, while giving working families better access to rental homes.
"This bill makes it easier for working Americans to buy and rent homes and strengthens the housing market across the country," Ellison said. "Our nation invests nearly four times as much in homeownership as we do in rental housing. As a result, millions of renters are unable to find affordable rental housing. The Common Sense Housing Investment Act focuses our housing policy on the families who need it most."
By converting the mortgage interest deduction to a 20% credit, 60 million homeowners would receive the tax credit, up from 43 million, according to the Tax Policy Center. Because the mortgage interest deduction requires homeowners to itemize their tax deductions, less than half of all homeowners currently deduct interest on their mortgage. Converting the deduction to a credit would benefit all those paying mortgage interest. The bill also lowers the cap on the mortgage size from $1 million to $500,000. It retains the allowance for home equity lines of credit and allows second homes within the $500,000 loan cap. These changes are phased in over five years.
The bill would generate $27 billion in revenue, which would help provide critical resources to address the national rental shortage. The government spends nearly four times as much on homeownership compared to rental housing, and nearly half of all rental housing pay more than 30% of their income for housing. The shortage primarily affects people under 25, the elderly, people with disabilities and low-income families. The bill invests the new revenue in expanding the Low Income Housing Tax Credit, Section 8 rental assistance and the public housing capital fund, and provides a source of permanent funding for the National Affordable Housing Trust Fund.
Over 600 national, state and local organizations have endorsed strengthening the mortgage interest deduction and using the savings to fund the National Housing Trust Fund. George W. Bush's Advisory Panel on Tax Reform, The National Commission on Fiscal Responsibility and Reform (Simpson-Bowles), the Bipartisan Policy Center Debt Reduction Task Force (Domenici-Rivlin) and scores of economists and academics have recommended converting the mortgage interest deduction to a mortgage interest credit..
"Stewards of Affordable Housing for the Future commends Congressman Ellison for introducing this legislation," Stewards of Affordable Housing for the Future President William Kelly said. "This bill promotes a more balanced housing policy that provides more federal resources for homeowners in lower tax brackets as well as to extremely low-income renters, who face the greatest housing challenges. It is very difficult to produce and maintain housing that is affordable to these households, and Mr. Ellison's bill would provide much-needed additional resources as demographic trends drive growing demand for affordable rental housing."
"We know kids do better at school and adults do better at work when they are stably housed," Liz Kuoppala, Executive Director of the Minnesota Coalition for the Homeless said. "The affordable housing crisis is a school, work, and family crisis for a growing number of people in Minnesota and across the country. We are grateful for Congressman Ellison's leadership on the Common Sense Housing Investment Act -- a bill to make targeted investments in affordable housing and rental assistance."