Affordable Housing, Reports and Publications

Terner Paper Proposes Tax Credit for Renters

Terner Center for Housing Innovation at the University of California at Berkeley

A new paper from the Terner Center for Housing Innovation at UC Berkeley proposes three policy options that use tax benefits to reduce housing costs for renters: Rent Affordability, Rent Reduction, and Composite.

The Rent Affordability option provides tax credits to all cost-burdened renters (i.e., those spending more than 30% of the income on rent and utilities) that earn less than 80% of the area median income (AMI). Almost 6 million rental households would no longer be cost-burdened if this proposal was adopted. This option would cost the federal government about $76 billion annually.

The Rent Reduction option provides tax credits of 12% to 33% of the rent for every household that earns less than 80% of the AMI. The percentage the tax credit covers is based on the household’s income. At a price tag of $41 billion annually, this option could relieve over 2 million rental households of their cost-burden.

The Composite option provides tax credits that cover 12% to 33% of the rent for households earning less than 80% of the AMI along with more assistance to extremely low-income families that are cost-burdened. At a cost of $43 billion per year, 3 million families would be relieved of their cost-burden.

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