Tag: Low-Income Housing Tax Credit

Representative Camp releases his proposal for tax reform. What does it mean for smart growth?

Yesterday Representative Dave Camp (R-MI), Chairman of the House Ways and Means Committee, introduced his proposal for comprehensive tax reform—and it has big implications for real estate and smart growth.

Each year Americans take billions of dollars worth of income tax deductions related to real estate. Things like the mortgage interest deduction and property tax deduction can represent big savings for a household—so big that they can influence taxpayers’ decisions about the type of home they buy. Even more credits are available to real estate developers, who can get tax breaks to help pay for things like redevelopment or the construction of low-income housing.

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House tax reform proposal a mixed bag on urban development issues

House Ways and Means Committee Chairman Dave Camp (R-MI) took the first step toward comprehensive tax reform yesterday and introduced a proposal that would have a mixed impact on communities’ efforts to grow in smart, economically efficient ways. Geoff Anderson, President and CEO of Smart Growth America, and Chris Leinberger, President of LOCUS, issued this joint statement in response:

“Above all, we’re glad Congress is finally tackling comprehensive tax reform. Hundreds of billions are currently spent through the tax code on housing and community development and much of this could be spent better than it is today. For anyone who wants to see these incentives achieve their maximum effect—helping Americans access good affordable housing choices in safe, stable, thriving communities, tax reform is a must.


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Rethink Real Estate: The Housing Credit


Trumbull Park Homes, a low-income housing development in Chicago, Illinois. Photo by Robert R. Gigliotti via Flickr.

In January, Smart Growth America released Federal Involvement in Real Estate, a survey of over 50 federal programs that influence real estate in some way. This post is the second in a series taking a closer look at some of the programs included in that survey.

Congress began the Low-Income Housing Tax Credit (LIHTC) program in 1986 to incentivize the private sector to develop more affordable rental units for low-income households. Since its creation, the credit has created or preserved nearly two million affordable rental units across the country.

The program offsets investors’ federal income tax liabilities, but the responsibility for administering the program is delegated to the states. States designate housing credit agencies to distribute a pool of tax credits from the U.S. Department of Treasury based on their population. In 2010, the amount of credits agencies received was equal to the greater of $2.10 per capita or $2,430,000. For example, the population of Oklahoma in 2010 was about 3.6 million people, so the state received about $7.7 million in tax credits, or 3.6 million multiplied by $2.10.

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