Horton, Santiago propose expanding Renter’s Tax Credit
“If we don't fix this, seniors and the poor to middle-income families will be forced to leave California”
The California State Capitol in Sacramento, California. Flickr/seliaymiwell
Federal Making Home Affordable Program expires Dec. 31, 2018; California bill will increase the nonrefundable renter’s tax credit
“Living in decent, affordable, and reasonably located housing is one of the most important determinants of well–being for every Californian. More than just basic shelter, housing affects our lives in other important ways, determining our access to work, education, recreation, shopping, and quality health care,” said Horton. “If we don’t fix this, seniors and the poor to middle-income families will be forced to leave California.”
As the Making Home Affordable Program, (HARP), signed into law by President Obama, is set to expire on Dec. 31, 2018, now is the time for this type of legislation. HARP helped homeowners refinance their mortgage with an average rate reduction of 2.1 percentage points, saving an average of more than $4,100 in interest during their first 12 months or about $345 every month. Additionally, homeowners who refinance from 30 year fixed mortgages to 15-year fixed mortgages can save up to $145,000.
California has the third-lowest homeownership rate and the fourth highest rent in the country. The decline in home purchases is generally related to higher rents as it becomes a challenge to save enough for a down payment. There is a direct relationship between high rents and high home prices. Additionally, studies find that housing costs are a burden on one’s finances when they surpass 30 percent of income.
According to a Public Policy Institute of California study, nearly one in three California renter households spends at least half of their income on rent. While incomes have remained stagnant, rents in California continue to soar, resulting in many low- and middle-income workers cutting essential spending, which also hurts the State’s overall economy.
Even with rent control in cities like Santa Monica and Los Angeles, as of March 2018, the average rent for an apartment in Los Angeles is $2,554, which is a 0.16 percent decrease from last year when the average rent was $2,558, and a 1.64percent increase from last month when the average rent was $2512.
“The cost of renting an apartment or home in California is as high as it’s ever been,” said Horton. In fact, many millennials are moving from California because the dream of affordable housing seems so unlikely. It’s necessary we do something to lower the cost of renting one’s residence in this state.”
The average rent in California has increased 60 percent over the past 20 years. The flat “renter’s credit” amount has not been adjusted since it was enacted in 1972.
Assemblymember Santiago testified at the Assembly Committee on Revenue and Taxation that, “With the rising cost of rental housing in California, the expansion of the renter’s credit can increase access to housing for low-income families.” The legislation passed out of the committee with a 9-0 bipartisan vote. The bill now moves to the Assembly Committee on Appropriations.
This bill will increase the nonrefundable renter’s credit to the greater of $60 allowed under current law or 10 percent of the median rent in the county where the property is occupied for individuals and $120 under current law or 20 percent of the median rent in the county where the property is occupied for joint filers, heads of households, and surviving spouses.
Horton encouraged renters to call the Assembly Committee on Appropriations at (916) 651-4101, and their respective congressional representative to request their vote to renew the HARP program to support increasing the renter’s credit.