On August 22nd, Senator Ron Wyden (D-OR) introduced a pair of housing bills on the Senate floor - S.3365 the “Middle Income Housing Tax Credit Act of 2018” and S.3364 the “First-Time Homebuyer Credit Act of 2018”. Both bills, if they become law, would enact sweeping changes to the existing housing finance system.
S.3365 would create a new tax credit, the Middle Income Housing Tax Credit (MIHTC). The MIHTC would function much like the current LIHTC Program (e.g. funds would be allocated to states based on population, and state housing agencies would then allocate funds to developers through a competitive process), the main difference being that MIHTCs would be for increasing the stock of rental housing that is priced for those households which are classified as moderate-income. If enacted in FY 2019, allocations would be $1 per capita with a $1.4 million minimum for small states. An additional $0.05 per capita would be reserved for rural areas. Additionally, unused MIHTCs would be converted into LIHTCs if a state does not allocate the MIHTC within one year. LIHTCs created through this method would remain under the state’s control for an additional year, after which they will be given back to Treasury for reallocation (as an LIHTC) to a new state.
S.3364 would establish a tax credit for first-time homebuyers that would cover 2.5% of the home’s purchase price, not to exceed $10,000. Additionally, the tax credit would not be available to households where an individual makes over $80,000 annually (this number is increased to $160,000 for married couples filing joint tax returns), and the tax credit would not be available for homes valued over $600,000. The tax credit would be fully refundable, it if the home is sold within five years then a portion of the credit must be repaid by the household (certain households can be excluded from this due to extenuating circumstances, such as relocation due to military deployment).Summary of S.3364
Text of S.3364
Summary of S.3365
Text of S.3365