Reforming the low-income housing tax credit (LIHTC) and providing neutral cost recovery for residential structures would tackle the problem of housing affordability in a complementary fashion. Neutral cost recovery expands housing supply and lowers costs of construction and rents, which can help LIHTC fund more below-market-rate projects.
These reforms are two important steps that policymakers can take to ensure the federal tax code is not a barrier to solving America’s affordable housing challenge.
Allowing full deductibility of residential structures would mean more housing construction, particularly multifamily housing—a practical solution to address housing affordability challenges.
6 min read
Reforming the Low-Income Housing Tax Credit (LIHTC) and providing neutral cost recovery for residential structures would tackle the problem of housing affordability in a complementary fashion.
Affordable housing is an issue that has had long-standing bipartisan interest in D.C. But the path to increase the supply of affordable housing, though often well-intentioned, has created a bureaucratic nightmare.
Improving the tax treatment of structures is one of the most cost-effective tax policy changes available to lawmakers as they consider how to remove investment barriers in the tax code to hasten the economic recovery. Policymakers must weigh the trade-offs among long-run economic output goals, revenue constraints, and the existing stock of structures.
13 min read
The Tax Reform Act of 1986 extended depreciation schedules for both commercial and noncommercial of real estate, reducing the attractiveness of those investments.
21 min read
Improving cost recovery for residential structures, while not a silver bullet for solving the housing crisis, would on the margin encourage more construction that would help push rents down across the board.
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