WASHINGTON – Rep. Ben Cardin reintroduced legislation Wednesday that would give tax breaks to investors or developers who build or rehabilitate housing in rural or low-income areas.
The Baltimore Democrat said the “Renewing the Dream Tax Credit Act” should make housing more affordable for low- and moderate-income households — a particular problem in some parts of Maryland where housing prices often outstrip income.
“There is a major disconnect in Maryland” between people’s income and the cost of homes, Cardin said Wednesday. “We should do very well with this tax credit.”
Cardin said that both rural and metropolitan areas would benefit from this tax credit, particularly Prince Georges and Montgomery counties.
The bill’s backers estimate that it could attract as much as $2 billion a year in new private equity investment, sparking a total of $6 billion in construction a year, at a cost of $2.5 billion over five years. They claim the credit could help put as many as 50,000 families nationwide in their own homes each year.
The bill, co-sponsored by Rep. Tom Reynolds, R-N.Y., is designed to encourage development in low-income neighborhoods and near lower-income jobs by providing tax credits for the cost of constructing a new home or renewing an existing property.
Developers could get a tax credit of up to 50 percent of the cost of construction or rehabilitation. But states, which would hand out the credits, would hand out only enough to cover the gap between the cost of developing a property and the price at which it could be sold to prospective buyers in those targeted areas.
Even though the tax credits would go to the developers, the real benefit would go to the prospective homebuyers who could afford such a home, said Garth Rieman, director of policy and government affairs at the National Council of State Housing Agencies.
His council backs the legislation along with groups such as the National Association of Home Builders, the National Association of Affordable Housing Lenders, the Federal National Mortgage Association — or Fannie Mae — and the National Association of Realtors, among nearly 40 other groups.
Linda Couch, deputy director of the National Low Income Housing Coalition, said her group is also in favor of tax credits that promote home ownership and the rejuvenation of low-income areas, although it was not on hand Wednesday for the bill’s introduction.
“Those tax credits work, there’s high competition for low-income tax credits,” Couch said.
“Tax credits like that have an impact because they’re meeting a need the private market has yet to meet,” she said. “The gap is not only getting wider between what people are earning” and the costs of owning a home, but between rents and income as well, she said.
Similar legislation was introduced in the last Congress but did not pass, despite have more than 300 House sponsors and more than 50 sponsors in the Senate.
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