Advocating for Tax Reform
Later this month, the apartment industry will be advocating on Capitol Hill, urging congressional representatives to consider critical tax reforms that impact the rental housing sector’s ability to meet the nation’s housing affordability goals. As Congress debates tax legislation, it is essential that policymakers recognize the vital role the rental housing industry plays in addressing the country’s growing housing challenges.
A key focus of our advocacy efforts will be securing the permanent extension of the 2017 Tax Cuts and Jobs Act (TCJA) tax provisions, which include several essential benefits for rental housing providers. Among these, we will emphasize the importance of Housing Affordability Tax Incentives, including:
✔ Expanding and enhancing the Low-Income Housing Tax Credit (LIHTC) to increase affordable housing supply.
✔ Enacting the Bipartisan Workforce Housing Tax Credit Act to support middle-income housing development.
✔ Enhancing Opportunity Zones to incentivize the rehabilitation of housing units in designated areas.
✔ Encouraging adaptive reuse of underutilized commercial properties to create much-needed multifamily housing.
These tax incentives provide proven tools to help expand the housing supply and encourage private investment in affordable housing. It is not enough to merely discuss the housing affordability crisis—we must take action.
Success - Low-Income Housing Tax Credit Program
This program has demonstrated remarkable success by leveraging public-private partnerships to combine federal funding with private investment, driving the development of affordable housing and spurring economic growth in communities that need it most. Since its inception in 1986, the initiative has played a pivotal role in the development and preservation of four (4) million apartments, according to the A Call To Invest in Our Neighborhoods (ACTION) campaign.
The Power of Opportunity Zones
The Opportunity Zones (OZ) Program, established under the TCJA, has empowered states to designate over 8,700 qualified low-income census tracts across the country. This program enables real estate developers and investors to rehabilitate multifamily properties in these areas while benefiting from two significant tax incentives. Additionally, investments held in Opportunity Zones for at least 10 years may qualify for permanent capital gains tax exclusions—a compelling incentive for long-term investment in affordable housing.
Enact the Bipartisan Workforce Housing Tax Credit Act
In December 2023, the Workforce Housing Tax Credit Act was introduced in both the House and Senate, garnering bipartisan support. Our industry strongly endorses this critical legislation, which aims to complement the highly successful Low-Income Housing Tax Credit (LIHTC). The Workforce Housing Tax Credit would extend the benefits of the LIHTC to moderate-income households, who, like low-income families, are grappling with the escalating costs of housing. Additionally, the Workforce Housing Tax Credit Act would empower state housing agencies to allocate credits to developers, who would then sell these credits to investors. In return, investors would receive a dollar-for-dollar reduction in their federal tax liability over a 15-year period. The equity raised from the sale of these credits would be used by developers to fund the construction of new apartments. Review the Workforce Housing Fact Sheet here.
Adaptive Reuse: Converting Commercial Space into Housing
Transforming underutilized commercial properties into residential housing is another innovative solution to help meet the demand for affordable units. While this adaptive reuse strategy presents challenges, a federal tax incentive could encourage developers to pursue these projects, revitalizing distressed commercial areas while stabilizing neighborhoods.
Tax policies that stimulate multifamily housing development must be a core component of any legislative effort aimed at addressing housing affordability. As we meet with our congressional representatives, we will advocate for sensible tax solutions that support the rental housing industry and help tackle the nation’s housing crisis.
We look forward to working with policymakers to drive meaningful reforms that unlock new housing opportunities and promote sustainable community development.