Officially dubbed the Common Sense Housing Investment Act, HR 1662 would convert the current Mortgage Interest Deduction into a non-refundable, 15 percent flat-rate tax credit instead. This tax credit would apply to all interest paid on mortgages up to $500,000.
Previously, the Mortgage Interest Deduction applied to mortgages up to $1 million. According to stats, however, only 4.5 percent of all mortgages secured between 2011 and 2013 were more than $500,000. Changing this cap, as well as introducing the flat-rate credit, will expand the number of tax break-eligible homeowners from 39 to 55 million.
“Working Americans who put in long hours should be able to afford a place to sleep and food to eat every night," Ellison said in a press release. "[HR 1622] would enable 16 million more current homeowners with a mortgage to receive a bigger tax break.”
If passed, the bill is expected to save the U.S. an estimated $230 billion over the next decade. Sixty percent of these savings would go toward the National Housing Trust Fund, a grant designed to address the nation’s affordable rental housing shortage. The Public Housing Capital Fund, the Low Income Housing Tax Credit and the Section 8 program would benefit from these savings as well.
“The Common Sense Housing Investment Act provides a more generous tax benefit for more working families with mortgages and makes a significant contribution to addressing the rental housing crisis,” Ellison said. “It also makes a significant contribution to the gap of 7 million affordable rental homes needed for extremely low-income families. In Minnesota, more than 6 in 10 renter households earning below $50,000 a year paid more than 30 percent of their income for rent. The Common Sense Housing Investment Act creates opportunity for every hard -working family, making our communities and stretching the paychecks of working Americans.”
According to a press release from the National Low Income Housing Coalition (NLIHC), the bill would also help lower rates of homelessness, all without using any additional government money.
“With the new resources generated by Mr. Ellison’s bill, we can end homelessness and help ensure that every child, senior citizen, and person with a disability in America has a decent, stable, and affordable home,” NLIHC President and CEO Sheila Crowley said. “Moreover, we can do this without costing the federal government any more money – without adding to the deficit.”
In addition to Ellison, five other Democratic representatives are also co-sponsoring the bill. These include Representative John Conyers Jr. (D-Michigan), Representative Donna Edwards (D-Maryland), Representative Barbara Lee (D-California), Representative Bobby Scott (D-Virginia), and Representative Bobby Rush (D-Illinois).