Income tax credit for landlords who rent for below market rate
The implementation of SB194 will amend existing laws to provide tax relief to those property owners who choose to rent their properties at a rate below the market average. Specifically, the credit amount is calculated as $200 for each $100 that the rent is below the threshold, with the potential for carrying forward any unused credits for up to three years. This adjustment in the law intends to encourage landlords to participate in the affordable housing market without compromising their financial viability significantly.
Senate Bill 194, introduced by Senators M. Dunwell and T. France, proposes an income tax credit for property owners who rent their dwellings below the market rate. The bill identifies that property owners can receive a tax credit if they charge monthly rent that is less than 110% of the fair market rent for the county where the property is located. This initiative aims to incentivize landlords to offer affordable housing options, aiding in addressing housing affordability issues within the state.
While the bill is presented as beneficial for increasing the availability of affordable housing, there are notable contentions surrounding it. Opponents may argue that tax credits could disproportionately favor wealthier landlords or large property management companies over smaller landlords, leading to a market distortion. Additionally, concerns arise about the verification process for ensuring that landlords do not manipulate agreements in a way to abuse the credit system. Also, the requirement for lease agreements of no less than one year and compliance with housing quality standards could draw criticism for being overly rigid.