Real estate tax incentives for tenants and taxpayers for housing

Housing prices and rents are increasing with demand hypertensions and supply does not go hand in hand. But there are shades of what is causing housing producers to act, assuming the costs and risks to build new houses. The nature of housing policy is significantly complicated, with some believing that, unless housing producers bowed, they will not build housing for people at lower income. This has led to commands, such as mandatory belt protection (Miz), which I have been likened to a bribery plan in which people who build housing are forced to pay pay to obtain their licenses and then the fees that turn into subsidies for large non -profit developers. A recent report shows that the incentives to produce limited rents are much more effective, even in Seattle, its compulsory integration plan.

First, it is important to mark it all The new housing added to a housing market is improvement in price increases and total inflation. Even new, more expensive units create options for people with more money to spend, and this means they will not compete for housing products against people with less money to spend. If the regulation allows, the producers will respond to demand, even to these lower products. For example, when the housing economy began to recover after the 2008 crash, in markets such as Seattle, there were many regular -sized apartments built, but also tiny. These smaller units in primary neighborhoods were cheaper even when other houses were more expensive.

Still, policy -makers are not happy when they are considering the price of self -adhesion in new homes, often rejecting what the expert himself called, the “side of the new”. Like a new pair of shoes or a new car, the newly established housing is often more expensive than the existing home. There is a temptation to force housing manufacturers and builders to include limited rent units in their apartment buildings. The reasoning is that when the market is hot and demand is increasing, these developers will make a lot of profits and some of them need to be returned to the public in the form of certain homes that are cheaper.

There are defects in this thought, but when we compare the coercion of inclusion or motivation, I prefer motivation. Most importantly, meeting the needs of people with lower income levels is more effective in building the market interest rate, which avoids investment in land, construction and operation. In other words, if we are worried that the new housing should include a lower housing with a lower price units, it is best to encourage this with motivation.

How does it work? The best example I have found are programs that offer a reduction in ownership taxes in exchange for the inclusion of limited rentals. And of these types of programs, what I most often point out is from the state of Washington, the Tax Exemption Program (MFTE). A few years ago, I made a comparison between the performance of Seattle’s Miz, the compulsory affordable housing program and the Seattle MFTE program. At that time, MFTE had created about 8,000 limited rental units at much less cost than the MHA 800 points.

The MFTE program relieves private property tax for improvements from the new construction. Saving the project is important enough to motivate many entries from private developers. In exchange for the tax break, the project must include a limited rental housing at an interest rate of 20% or 20 out of 100 points. In Seattle, the deal lasts for 12 years and could last for 20, promising financially affordable housing at income from 40% to 80%.

THE Washington University’s latest report ratified the effectiveness of the program. According to the latest measurements, the program created “7,047 limited income units” with 6,600 more units in the program.

The study also factors on the idea that there were a total of 33,956 points created in the 303 participating projects. The value here is easy to see. If there was no motivation, these projects might not have been possible at all. Finally, the program costs $ 35 million to forget about tax revenue, the price of a 70 -point Lihtc building in the city. Taxpayers also won a long time with this program, paying just under $ 5,000 per unit. The numbers are not exactly lined with previous reports, but the fact remains that with the motivation, taxpayers and tenants earn large ones, so developers whose projects work best with less tax burden. It is a principle and mathematics that must convince those responsible for policymaking everywhere who is wondering how to create more affordable housing.