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While we continue to support proposals that would also give states the option to allocate credits to tenants directly or to lenders, a project-based renters’ credit would be the easiest approach to administer and might therefore be a good starting point for rebalancing federal housing tax policy.
A renters’ credit could have far-reaching benefits for the lowest-income renter households, and particularly children in those households.
In addition to extending rental assistance to more families, a state-administered renters’ credit would offer opportunities for coordination with other state-run programs.
(This coordination is difficult to achieve through existing rental assistance programs, which are mainly locally administered.) For example, states could use the renters’ credit to reduce rents in LIHTC developments to levels affordable to poor households, help families participating in Temporary Assistance for Needy Families (TANF) for whom lack of stable housing is a barrier to work, provide supportive housing to families at risk of having their children placed in foster care, and enable Medicaid-eligible elderly people or people with disabilities to live in service-enriched developments rather than nursing homes or other institutions.
The credit would be scaled up gradually, so its cost and the number of families assisted would be much lower during the early years of implementation.
In recent years, proposals for a renters’ tax credit have received growing attention from a diverse range of organizations.
Creating a renters’ tax credit would improve the match between federal housing spending and need.By allocating renters’ credits to developments in neighborhoods where infrastructure investments are planned, states could ensure that working-poor families and seniors and people with disabilities are not excluded from those investments’ benefits.