WASHINGTON, D.C. – With the Senate and House set to consider tax extenders legislation, U.S. Sen. Sherrod Brown (D-OH) highlighted two key provisions that would extend tax benefits for struggling homeowners and low-income communities.
The bill would lock in the 9 percent minimum rate for the Low-Income Housing Tax Credit, which helps states rehabilitate and construct rental housing for low-income families. It also would renew through 2016 the Mortgage Forgiveness Debt Relief Act, a benefit that prevents mortgage modifications or short sales from being treated as taxable income.
“Tax credits have the power to lift Americans out of poverty, invest in our communities, and help keep families in their homes while they work to get back on their feet,” said Brown, ranking member of the U.S. Senate Committee on Banking, Housing, and Urban Affairs, and member of the Senate Finance Committee. “This bill will ensure that struggling homeowners who modified their mortgages won’t get hit with a huge tax increase. It will also make permanent the minimum rate for the Low-Income Housing Tax Credit, one of our country’s most successful affordable housing program and an important driver of investment and job creation across Ohio.”
Mortgage Forgiveness Debt Relief Act
The tax extenders bill would permanently extend relief originally passed in the Mortgage Forgiveness Debt Relief Act of 2007. The legislation allows homeowners to exclude from annual, reportable income the discharge of mortgage debt owed on their homes. Unless the law is extended, individuals who receive assistance through the Home Affordable Modification Program (HAMP), Ohio’s Save the Dream Program, or other private agreements with financial institutions to save their home from foreclosure may now face additional tax consequences.
Low-Income Housing Tax Credit (LIHTC)
The bill would make permanent the minimum 9 percent rate floor for the Low-Income Housing Tax Credit (LIHTC) Program, one of America’ most successful affordable housing programs. Since its inception in 1986, the program has helped build or rehabilitate more than 2 million affordable apartment units. In Ohio, it’s helped provide funding for capital numerous projects like Lakewoods in Lucas County, a 48-home complex for low-income seniors. The program provides federal resources to state housing agencies, who allocate tax credits to housing projects that meet a local affordable housing need.
“The permanent fix at 9 percent of the Low Income Housing Tax Credit will allow nonprofit and developers of affordable housing to leverage additional private capital,” said Hal Keller, president of the Ohio Capital Corporation for Housing. “The additional private sector investment will close funding gaps and keep rents low. We are extremely grateful for Senator Brown for his leadership in getting this measure passed. The permanent nature of this fix, sought for years, is very, very important and will add certainty and resources to this successful program based upon public-private partnerships.”
“The Low Income Housing Tax Credit is a key to addressing the crisis of lack of affordable housing for low income Seniors, so we are thrilled for Senator Brown's support and work on this issue,” said Michelle Norris, president of National Church Residences Development Corporation. “Establishing a permanent floor will help us preserve and maintain more housing for seniors, which will help keep them in safe, affordable housing, and able to bring health care services to them in their homes and out of higher levels of care such as nursing facilities and hospitals. Thank you Senator Brown for your leadership!”
“The Affordable Housing Alliance of Central Ohio commends Senator Brown for his efforts to successfully make the Low Income Housing Tax Credit a permanent tool for the creation of safe, decent, and affordable homes,” said E.J. Thomas, chair of the Affordable Housing Alliance of Central Ohio and CEO, Habitat for Humanity Mid-Ohio. “The Central Ohio region will need over 54,000 units of housing to accommodate growth over the next decade, and the Low Income Housing Tax Credit will is a key component to meeting that need.”
"Along with seeing the first dollars from National Housing Trust Fund will finally hit the street in 2016, another big boost to Ohio’s affordable housing work is the permanent extension of the Low Income Housing Tax Credit program," said Bill Faith, Executive Director of the Coalition on Homelessness and Housing in Ohio. "The LIHTC has helped Ohio to produce more than 104,000 affordable housing units in Ohio since its inception in 1987. With this critical step, affordable housing development and preservation can continue on into the future."