Tax Ties Hands of Those With Housing Credits

So the Coalition for Affordable Rental Housing is concerned about the dearth of affordable new rental units [“Congressional Action Urged on Shortage of Housing,” March 14].

May I make a suggestion? Instead of an increase in the tax credits for those who build affordable housing, why don’t they make it possible for those who have the credits to be able to use them?

The Tax Reform Act of 1986 stated that private investors could invest in affordable housing partnerships, obtain credits based on the amount of their investment and offset up to $25,000 of income each year. Translation: A person like me could use up to $7,000 per year in credits. That’s 28% of 25,000.

Fact is, though, I can’t even use half the $7,000 credits that I get each year. The reason: the alternative minimum tax. The IRS decided that the tax credits are “tax preference items” and cannot be used to offset the AMT. All that Congress has to do to correct this situation is what it has already done with family credits, based on the number of children in a family.

In that case Congress was worried about the flak it would get from families unable to use the credits they were given, but no one seems concerned about investors who invested in good faith and now are not able to use their credits fully.

Believe me, if tax credits from affordable housing partnerships could be used to offset the AMT, investors would fall all over themselves to participate in the program and the shortage of affordable rental housing would be history.

SIDNEY C. GILBERT

Rancho Palos Verdes

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