Tax Breaks Bill for Renters
A recently introduced bill in congress would allow renters to deduct from their federal taxes part of what they pay for the primary roof over their heads. “There’s an unequal treatment now of owners and renters,” says Rep. Alan Grayson, a Democrat from Florida, who introduced the bill. He hopes this bill would “level the playing field for renters”. Mindy Ault, a research associate at the National Housing Conference, a group that supports affordable housing, notes that rents are steadily rising, but wages aren’t necessarily keeping pace. “It could be a great boon for renters,” Mindy says.The bill could save some renters thousands per year.
In 2015 approximately 37% of US households were renters according to the Joint Center for Housing Studies of Harvard University. There are an estimated 21.3 million renters in the US who are considered “cost-burdened” by the amount they need to pay in rent compared to their income. Currently homeowners can deduct the interest on their mortgage and property taxes on their home for Federal Income Tax purposes. The bill’s detractors raise concerns that it would have an adverse effect on homeownership and the economy. Proponents say a federal rent Tax deduction would help homeownership, as renters could save more money for a down payment on a home.
Linda Couch, senior vice president for policy at the National Low Income Housing Coalition, says that “the likelihood of the bill being signed into law is slim. Proposed laws tend not to get passed the first time they are introduced”. This bill is very controversial with strong support for and against the bill. Further, the true cost and benefits of such a deduction have been difficult to quantify.