TAX NOTES FOR RENTERS? REALLY?
Here's something we've never seen before. What possible tax benefit could there be from leaing real property?
Up to now - none. And it's been that way forever, But, Florida state Representative, Alan Grayson (D) from the Ninth District (Orlando) has introduced a bill that he says will level the playing field for owners and renters.
The following excerpts are from an article in Realtor.com authored by Clare Trapasso a senior editor:
The bill, if it became law, would allow renters to deduct from their federal taxes what they pay for the primary roof over their heads—a proposal that could save them thousands per year.
“There’s an unequal treatment now of owners and renters,” says Rep. Alan Grayson, a Democrat from Florida, who introduced the bill. He hopes this bill would level the playing field .
For example, the average taxpayer shelling out about $1,500 a month (or $18,000 a year) could potentially save $4,500 annually through the deduction if he or she is in the 25% tax bracket, he says.
“Renters should be able to share in the tax savings,” he says. “This is a tax benefit that would go primarily to people who need it.”
“It could be a great boon for renters,” says Mindy Ault, a research associate at the National Housing Conference, a group that supports affordable housing. She notes that rents are steadily rising, but wages aren’t necessarily keeping pace.
Homeowners can currently deduct the interest they pay on their mortgages (up to $1 million) and their property taxes from their income taxes. That can add up to $2,500 in savings for those in the 25% tax bracket deducting $10,000 of interest.
Those tax breaks are strong incentives for folks to buy their homes. But if the rental bill was passed, more people, particularly younger individuals and couples, might choose to continue renting instead, says Ault.
But the likelihood of the bill being signed into law is slim, says Linda Couch, senior vice president for policy at the National Low Income Housing Coalition. Proposed laws tend not to get passed the first time they are introduced and this one was proposed by a Democrat in a Republican-controlled Congress, she says.
However, if it did pass, the tax break might actually boost homeownership.
“It could help renters who are looking to become homeowners, because it will lower their housing costs,” Couch says. “That savings could be put toward a down payment.”
Here's a link the while article: Tax Break for Renters