[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 948 Introduced in House (IH)]
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115th CONGRESS
1st Session
H. R. 948
To amend the Internal Revenue Code of 1986 to replace the mortgage
interest deduction with a nonrefundable credit for indebtedness secured
by a residence, to provide affordable housing to extremely low-income
families, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
February 7, 2017
Mr. Ellison introduced the following bill; which was referred to the
Committee on Ways and Means, and in addition to the Committee on
Financial Services, for a period to be subsequently determined by the
Speaker, in each case for consideration of such provisions as fall
within the jurisdiction of the committee concerned
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to replace the mortgage
interest deduction with a nonrefundable credit for indebtedness secured
by a residence, to provide affordable housing to extremely low-income
families, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Common Sense Housing Investment Act
of 2017''.
SEC. 2. CONGRESSIONAL FINDINGS.
The Congress finds the following:
(1) Two principal Federal housing goals are to increase the
rate of home ownership and make rental housing affordable for
low-income families and individuals.
(2) Much more progress has been achieved on the first goal
than on the second goal.
(3) The Federal Government devotes more than three times
the amount of budgetary resources to supporting home ownership
than it devotes to making affordable rental housing available.
(4) The burden of housing costs is more pronounced among
renters than among owners.
(5) There is a shortage of more than 7 million homes
affordable to families in the bottom 20 percent of income,
meaning that there are only 31 affordable units for every 100
families.
(6) Only one in four families that qualify for rental
housing assistance receives benefits.
(7) Housing assistance waiting lists can be 10 years long
and in many communities are closed.
(8) The shortage of rental homes that are affordable for
extremely low-income households to be the principal cause of
homelessness in the United States.
(9) Public housing facilities in the United States have
more than $26 billion in deferred maintenance after decades of
neglect which results in a loss of 10,000 units each year.
(10) The low-income housing tax credit successfully
provides 100,000 units of affordable housing every year.
(11) Every tax reform commission has recommended capping
the mortgage interest deduction and converting it to a fairer
and simpler credit.
(12) More than 75 percent of the value of the mortgage
interest deduction inures to the benefit of the top 20 percent
of earners.
(13) Fewer than half of tax filers with a home mortgage
claim the mortgage interest deduction.
(14) Only 9 percent of rural tax filers claim the mortgage
interest deduction.
(15) Ninety-four percent of homes sold between 2013 and
2015 sold for less than $500,000.
(16) A better approach that provides equitable benefits for
families who buy homes, enables more low- and moderate-income
homeowners to receive a benefit, and invests in affordable
rental housing to assist those who used to be homeless or who
have extremely or very low incomes is needed to strengthen
families and communities.
SEC. 3. REPLACEMENT OF MORTGAGE INTEREST DEDUCTION WITH MORTGAGE
INTEREST CREDIT.
(a) Nonrefundable Credit.--Subpart A of part IV of subchapter A of
chapter 1 of the Internal Revenue Code of 1986 (relating to
nonrefundable personal credits) is amended by inserting after section
25D the following new section:
``SEC. 25E. INTEREST ON INDEBTEDNESS SECURED BY QUALIFIED RESIDENCE.
``(a) Allowance of Credit.--In the case of an individual, there
shall be allowed as a credit against the tax imposed by this chapter
for the taxable year an amount equal to 15 percent of the qualified
residence interest paid or accrued during the taxable year.
``(b) Qualified Residence Interest.--For purposes of this section--
``(1) In general.--The term `qualified residence interest'
means interest which is paid or accrued during the taxable year
on--
``(A) acquisition indebtedness with respect to any
qualified residence of the taxpayer, or
``(B) home equity indebtedness with respect to any
qualified residence of the taxpayer.
For purposes of the preceding sentence, the determination of
whether any property is a qualified residence of the taxpayer
shall be made as of the time the interest is accrued.
``(2) Overall limitation.--The aggregate amount of
indebtedness taken into account for any period for purposes of
this section shall not exceed $500,000 ($250,000 in the case of
a married individual filing a separate return or unmarried
individuals filing separate returns for the same property).
``(3) Acquisition indebtedness.--The term `acquisition
indebtedness' means any indebtedness which--
``(A) is incurred in acquiring, constructing, or
substantially improving any qualified residence of the
taxpayer, and
``(B) is secured by such residence.
Such term also includes any indebtedness secured by such
residence resulting from the refinancing of indebtedness
meeting the requirements of the preceding sentence (or this
sentence), but only to the extent the amount of the
indebtedness resulting from such refinancing does not exceed
the amount of the refinanced indebtedness.
``(4) Home equity indebtedness.--
``(A) In general.--The term `home equity
indebtedness' means any indebtedness (other than
acquisition indebtedness) secured by a qualified
residence to the extent the aggregate amount of such
indebtedness does not exceed--
``(i) the fair market value of such
qualified residence, reduced by
``(ii) the amount of acquisition
indebtedness with respect to such residence.
``(B) Limitation.--The aggregate amount treated as
home equity indebtedness for any period shall not
exceed $100,000 ($50,000 in the case of a married
individual filing a separate return).
``(c) Special Rules.--For purposes of this section--
``(1) Qualified residence.--The term `qualified residence'
means--
``(A) the principal residence (within the meaning
of section 121) of the taxpayer, and
``(B) 1 other residence of the taxpayer which is
selected by the taxpayer for purposes of this
subsection for the taxable year and which is used by
the taxpayer as a residence (within the meaning of
section 280A(d)(1)).
``(2) Married individuals filing separate returns.--If a
married couple does not file a joint return for the taxable
year--
``(A) such couple shall be treated as 1 taxpayer
for purposes of paragraph (1), and
``(B) each individual shall be entitled to take
into account 1 residence unless both individuals
consent in writing to 1 individual taking into account
the principal residence and 1 other residence.
``(3) Residence not rented.--For purposes of paragraph
(1)(B), notwithstanding section 280A(d)(1), if the taxpayer
does not rent a dwelling unit at any time during a taxable
year, such unit may be treated as a residence for such taxable
year.
``(4) Unenforceable security interests.--Indebtedness shall
not fail to be treated as secured by any property solely
because, under any applicable State or local homestead or other
debtor protection law in effect on August 16, 1986, the
security interest is ineffective or the enforceability of the
security interest is restricted.
``(5) Special rules for estates and trusts.--For purposes
of determining whether any interest paid or accrued by an
estate or trust is qualified residence interest, any residence
held by such estate or trust shall be treated as a qualified
residence of such estate or trust if such estate or trust
establishes that such residence is a qualified residence of a
beneficiary who has a present interest in such estate or trust
or an interest in the residuary of such estate or trust.
``(d) Coordination With Deduction.--In the case of any taxable year
beginning in calendar years 2017 through 2021, the taxpayer may elect
to apply this section in lieu of the deduction under section 163 for
qualified residence interest.''.
(b) Phaseout of Deduction.--Section 163(h) of such Code is amended
by adding at the end the following new paragraph:
``(6) Phaseout.--
``(A) In general.--In the case of any taxable year
beginning in a calendar year after 2017, the amount
otherwise allowable as a deduction by reason of
paragraph (2)(D) shall be the applicable percentage of
such amount.
``(B) Applicable percentage.--For purposes of
subparagraph (A), the applicable percentage shall be
determined in accordance with the following table:
------------------------------------------------------------------------
The applicable
``For taxable years beginning in calendar year: percentage
is:
------------------------------------------------------------------------
2017.................................................... 100%
2018.................................................... 80%
2019.................................................... 60%
2020.................................................... 40%
2021.................................................... 20%
2022 and thereafter..................................... 0%.''.
------------------------------------------------------------------------
(c) Phasedown of Mortgage Limit.--Subparagraph (B) of section
163(h)(3) of such Code is amended by adding at the end the following:
``(iii) Phasedown.--
``(I) In general.--In the case of
any taxable year beginning in calendar
years 2017 through 2021, clause (ii)
shall be applied by substituting the
amounts specified in the table in
subclause (II) of this clause for
`$1,000,000' and `$500,000',
respectively.
``(II) Phasedown amounts.--For
purposes of subclause (I), the amounts
specified in this subclause for a
taxable year shall be the amounts
specified in the following table:
------------------------------------------------------------------------
Amount Amount
``For taxable years beginning in calendar substituted substituted
year: for for
$1,000,000: $500,000:
------------------------------------------------------------------------
2017.......................................... $1,000,000 $500,000
2018.......................................... $900,000 $450,000
2019.......................................... $800,000 $400,000
2020.......................................... $700,000 $350,000
2021.......................................... $600,000 $300,000.''
.
------------------------------------------------------------------------
(d) Clerical Amendment.--The table of sections for subpart A of
part IV of subchapter A of chapter 1 of such Code is amended by
inserting after section 25D the following new item:
``Sec. 25E. Interest on indebtedness secured by qualified residence.''.
(e) Effective Date.--The amendments made by this section shall
apply with respect to interest paid or accrued after December 31, 2016.
SEC. 4. DEDUCTION ALLOWED FOR INTEREST AND TAXES RELATING TO LAND FOR
DWELLING PURPOSES OWNED OR LEASED BY COOPERATIVE HOUSING
CORPORATIONS.
(a) In General.--Subparagraph (B) of section 216(b)(1) of the
Internal Revenue Code of 1986 is amended by inserting ``or land,''
after ``building,''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to amounts paid or accrued after December 31, 2016.
SEC. 5. USE OF MORTGAGE INTEREST SAVINGS TO INCREASE LOW-INCOME HOUSING
TAX CREDIT.
(a) In General.--Subclause (I) of section 42(h)(3)(C)(ii) of the
Internal Revenue Code of 1986 is amended by striking ``$1.75 ($1.50 for
2001)'' and inserting ``$2.70''.
(b) Inflation Adjustment.--Subparagraph (H) of section 42(h)(3) of
such Code is amended to read as follows:
``(H) Cost-of-living adjustment.--
``(i) In general.--In the case of a
calendar year after 2002, the $2,000,000 amount
in subparagraph (C) shall be increased by an
amount equal to--
``(I) such dollar amount,
multiplied by
``(II) the cost-of-living
adjustment determined under section
1(f)(3) for such calendar year by
substituting `calendar year 2001' for
`calendar year 1992' in subparagraph
(B) thereof.
``(ii) Per capita amount.--In the case of a
calendar year after 2017, the $2.70 amount in
subparagraph (C) shall be increased by an
amount equal to--
``(I) such dollar amount,
multiplied by
``(II) the cost-of-living
adjustment determined under section
1(f)(3) for such calendar year by
substituting `calendar year 2016' for
`calendar year 1992' in subparagraph
(B) thereof.
``(iii) Rounding.--
``(I) In the case of the $2,000,000
amount, any increase under clause (i)
which is not a multiple of $5,000 shall
be rounded to the next lowest multiple
of $5,000.
``(II) In the case of the $2.70
amount, any increase under clause (ii)
which is not a multiple of 5 cents
shall be rounded to the next lowest
multiple of 5 cents.''.
(c) Eligible Basis.--Clause (i) of section 42(d)(5)(B) of such Code
is amended by striking ``and'' at the end of subclause (I), by striking
the period at the end of subclause (II) and inserting ``, and'', and by
adding at the end the following:
``(III) in the case of a building
containing units which are designated
to serve extremely low-income
households by the State housing credit
agency and require the increase in
credit under this subparagraph in order
for such building to be financially
feasible as part of a qualified low-
income housing project, the eligible
basis of such building determined by
the portion of such units shall be 150
percent of such basis determined
without regard to this subparagraph.''.
(d) Effective Date.--The amendments made by this section shall
apply to allocations made in calendar years beginning after December
31, 2017.
SEC. 6. USE OF MORTGAGE INTEREST SAVINGS FOR AFFORDABLE HOUSING
PROGRAMS.
(a) Use of Savings.--For each year, the Secretary of the Treasury
shall determine the amount of revenues accruing to the general fund of
the Treasury by reason of the enactment of section 3 of this Act that
remain after use of such revenues in accordance with section 5 of this
Act and shall credit an amount equal to such remaining revenues as
follows:
(1) Housing trust fund.--The Secretary shall credit the
Housing Trust Fund established under section 1338 of the
Federal Housing Enterprises Financial Safety and Soundness Act
of 1992 (12 U.S.C. 4568) with an amount equal to 60 percent of
the amount of such remaining revenues.
(2) Rental assistance.--An amount equal to 30 percent of
the amount of such remaining revenues shall be credited for
rental assistance, which may include a new Renter's Tax Credit
and an expansion of rental assistance by the Secretary of
Housing and Urban Development under any program of such
Department providing such assistance or by the Secretary of
Agriculture under any rural housing program of such Department
providing such assistance.
(3) Public housing capital fund.--The Secretary shall
credit an amount equal to 10 percent of the amount of such
remaining revenues to the Public Housing Capital Fund under
section 9(d) of the United States Housing Act of 1937 (42
U.S.C. 1437g(d)).
(b) Changes to Housing Trust Fund.--Not later than the expiration
of the 6-month period beginning on the date of the enactment of this
Act, the Secretary of Housing and Urban Development shall revise the
regulations relating to the Housing Trust Fund established under
section 1338 of the Federal Housing Enterprises Financial Safety and
Soundness Act of 1992 (12 U.S.C. 4568) to provide that such section is
carried out with the maximum amount of flexibility possible while
complying with such section, which shall include revising such
regulations--
(1) to increase the limitation on amounts from the Fund
that are available for use for operating assistance for
housing;
(2) to allow public housing agencies and tribally
designated housing entities to be recipient of grants amounts
from the Fund that are allocated to a State or State designated
entity; and
(3) eliminate the applicability of rules for the Fund that
are based on the HOME Investment Partnerships Act (42 U.S.C.
1721 et seq.).
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