Bill Seeks to Change Mortgage Interest Deduction, Expand LIHTC

Congressman Keith Ellison (D-MN) recently introduced H.R. 1662, Common Sense Housing Investment Act of 2015. The proposed bill would replace the mortgage interest deduction with a 15 percent flat rate tax credit on interest paid on mortgages up to $500,000. The tax credit would be available to all homeowners, regardless of whether they claim the standard deduction or itemize their tax deductions.

According to Rep. Ellison's press release, H.R. 1662 would generate more than $200 billion in revenue over 10 years, which it would redistribute into existing affordable rental housing programs, including the Low Income Housing Tax Credit (LIHTC), Section 8 rental assistance, the Public Housing Capital Fund, and the Housing Trust Fund. Specifically, the bill would increase the per-capita allocation for LIHTCs from $2.30 to $2.70 and would also provide a 50 percent eligible basis boost for rental housing targeting extremely low-income households.