Big boost for renter tax credit in California

The law would increase the existing $60 credit for single filers to $500, and the $120 credit for heads of household, surviving spouses or joint filers to $1,000. The larger deduction would also for the first time be available to single parents. Single filers earning $43,533 or less and joint filers earning $87,066 or less would be eligible.

“We’ve treated renters like the doormat outside California’s economic recovery house,” Glazer said in a statement. “We cannot make an economic comeback without renters having their rightful place inside. Renters have waited 42 years for a modest level of fairness in our tax code.”

Almost 2.4 million renters could benefit from the credit, according to an estimate by the state’s Franchise Tax Board. The renter’s tax credit was established in 1972, increasing just once in 1979. Since then, median rent in the state has more than quintupled, according to Glazer’s office.

Median rent for available one bedrooms last month climbed to $1,942 in the state, according to a report by Zumper, which indicates San Mateo as the fourth most expensive city in the Bay Area to rent in with a $2,430 median rent for a one-bedroom. San Francisco, Palo Alto and Mountain View were the frontrunners, with rents at $2,810, $2,700 and 2,690, respectively.

Meanwhile, soaring homeownership costs, with median prices north of $2 million in the county, are keeping younger generations renting for longer.

Becker said 44% of households in his district are renters, numbers that are higher in lower income areas, including East Palo Alter where 60% of households are renters.

“California renters are caught between the soaring costs to keep a roof over their heads and the scarcity of affordable housing,” he said in a statement. “No one feels the squeeze as much as low-income families. They often have no options but to pay rising rents.”

Housing advocates have long taken issue with undersized tax credits for renters, pointing to larger deductions available to homeowners in the form of mortgage interest and property tax deductions. An increased renters’ deduction has been seen as a progressive tax policy to bolster economic equality.

Projected revenue losses for mortgage interest deduction and property tax deduction in the 2019-20 fiscal year are $4.1 billion and $2.2 billion, respectively, while renters’ credits make up just $140 million, according to the California Budget and Policy Center.

As they are with the currently available deduction, renters would be eligible if they are California residents who paid rent for at least six months in the year prior. The full credit would be available if it exceeds a renter’s total tax liability.

corey@smdailyjournal.com

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