Middle-income housing tax credit proposed by Wyden - KPMG United States
Share with your friends

Legislative Update: Middle-income housing tax credit proposed by Wyden

Middle-income housing tax credit

Senator Ron Wyden (D-OR), ranking member of the Senate Finance Committee, today released draft legislation that would create a new tax credit “…to spur development of rental homes affordable to Americans with moderate income.”


Related content

The middle-income housing credit (MIHTC) would be modeled after the low-income housing credit that has financed about 2.8 million affordable homes for low-income persons since its enactment in 1986.


Details of the discussion draft provide the following:

  • The federal government would allocate tax credits to the states based on population. For 2017, the allocation would be $1 per capita with a $1.14 million small state minimum.  State housing authorities would allocate the credits to developers through a competitive process.  The credits would be provided to developers over a 15-year compliance period.  The credit amount would equal 50% of the present value of the qualifying costs, or 5% a year on an undiscounted basis. However, state housing authorities would only allocate so much credit as makes a housing project feasible.
  • To qualify for the credit, a rental property would need to meet two affordability standards: (1) a property would have to include a minimum percentage of affordable units; and (2) rents for those units could not exceed maximum amounts based on average incomes in the area.  Specifically, at least 60% of the property’s units would have to be occupied by individuals with incomes of 100% or less of “area median gross income” (AMGI). Furthermore, tenants’ rents could not exceed 30% of 100% of AMGI. The affordability restrictions would remain in place for up to an additional 15 years after the compliance period. Credits would be discontinued to the developer if a project fails to meet these income/rent requirements.
  • While geared to incentivizing the construction of affordable housing for middle-income families, the discussion draft also includes protections for low-income affordable housing. A state’s unused MIHTC credits would go back into the state’s low-income housing tax credit (LIHTC) allocation and then back to the national LIHTC allocation pool if not used by the state. 

Request for comments

Senator Wyden has requested comments within 90 days on the discussion draft, harmonizing and coordinating the proposed new credit with the LIHTC, and other issues.


© 2019 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

KPMG International Cooperative (“KPMG International”) is a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us


Want to do business with KPMG?


Request for proposal