Tax Credits

Brief: Tax credits may be offered by either the state or federal level and provided to either homeowners/buyers or employers for the purpose of stimulating purchases or assisting builders with new housing development.

Examples:
Low Income Housing Tax Credits (LIHTC), Nationwide
LIHTC Credits are distributed by the state through the IRS for the purposes of new or rehab residential construction that is geared for low-income households. Local Impact of LIHTC Tax

Credits:
From 1990-2005, within Orange County, 36 New Construction projects utilizing these tax credits have contributed a total of 3035 new rental units (of those, 2832 are “low income”, 50-60% of AMI). The vast majority, approximately 2000 of all of these, were constructed since 1999. Federal Tax Credits, Nationwide

The Building Industry Association has supported passing tax credits at the congressional level intended for buyers of new homes to stimulate purchases and reduce cost of ownership. Tax credits for home purchases could be most effective if geared towards the most expensive housing markets such as the southern California metropolitan areas.

“Housing America’s Workforce” Act 2008
HR 1850/S. 1870 amends the federal tax code to allow a tax credit for employers who contribute towards “qualified housing expenses” under an Employer Assisted Housing Program (EAH). Housing expenses, defined according to the bill, would include homeownership or rental assistance. The bill also allows the employee receiving assistance to exclude the amount received from taxable income. The tax credit equals $0.50 on every dollar the employer provides towards EAH.

The amount of credit is limited to the lesser amount of either $10,000 or 6% of the employee’s purchase price of the home. Credits for rental assistance are limited to the amount of $2,000 per employee.


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