Provide income tax credit for renting dwelling below market rate
Impact
If enacted, HB 416 would amend Montana's tax code to introduce a mechanism specifically aimed at reducing rental prices through financial incentives. By incorporating this tax credit into the state tax legislation, the bill could lead to decreased rental costs for tenants and an overall positive impact on housing affordability within Montana. The legislation also includes provisions that the credit may be claimed only by those who rent out units that meet specific housing quality standards and excludes properties already benefiting from other rent-limiting programs, ensuring it caters to newly affordable housing rather than duplicating existing benefits.
Summary
House Bill 416 proposes an income tax credit for landlords who rent residential dwellings at less than 130% of the fair market rent for the county. The bill aims to encourage rent reduction, thereby potentially increasing housing affordability for tenants. The tax credit is designed to apply to individual taxpayers, pass-through entities, and corporations, allowing them to gradually escalate the claimable amount over the years, peaking at 50% of the forgone rent by the fourth year. This approach aims to support not just tenants but also landlords who voluntarily choose to lower their rental rates while benefiting from the tax relief.
Contention
Although the intent behind HB 416 is to foster affordable housing initiatives, potential points of contention may arise regarding the execution and monitoring of the tax credit program. Critics may question the effectiveness of such incentives and whether they would actually lead to substantial changes in rental pricing behavior among landlords. Additionally, there could be concerns over the possibility of abuse (e.g., landlords not acting at arm's length with tenants) or the program resulting in unintended consequences, such as increased rental rates after the credit period ends, as landlords adjust to maximize potential profits once federal incentives are no longer available.