There’s no cure for South Florida home prices, but there is a treatment | Opinion

When home prices go up, buyers get frustrated and sellers are thrilled. But South Florida renters become heartbroken. They wonder if they’ll ever be able to afford a place to call their own.

We’ve been hearing this for years now. It’s a depressing part of our job as HUD-certified housing counselors.

For the past 15 years, we’ve heard horror stories from two groups: South Florida renters who desperately want to own, and homeowners whose financial woes might force them to become renters once again.

Skyrocketing home prices obviously hurt renters, but rising home values also hike property taxes, which hurt lower-income homeowners. And of course, inflation hurts both groups.

Yet those existing homeowners have more options for staying in the homes than renters do for getting into one. Federal, state and local governments already offer programs to help struggling homeowners, and as housing counselors, we happily help families navigate these. Sadly, though, renters don’t have the same options.

A vexing, taxing problem

Homeowners get multiple deductions on their taxes — everything from mortgage interest to property taxes to mortgage insurance to capital gains when they sell.

Renters get nothing. The IRS doesn’t let you deduct rent from your taxes. Maybe it should.

It’s not a new idea. It just has one big problem: It would never work.

In the past, housing advocates have pushed for this unique solution. A common version would give renters a deduction equal to 20% of their rent. So if their rent was $2,000 a month, the deduction would effectively lower that to $1,600. With the extra $400, the renter could save for a home.

This proposal never became law because critics made several excellent points:

• Many landlords would simply jack up rents by the same amount, because they would realize their tenants have the money.
• There’s no guarantee renters will save this windfall instead of spending it now.
• With Harvard’s Joint Center for Housing Studies estimating there are 44 million households that rent, that sudden wave of extra consumer spending sloshing around the economy could cause inflation all by itself.

Interestingly, there’s one single, straightforward fix to all three of these problems that Barry Rothman, our long-time housing counseling program manager, has been germinating for the past year or so.

Almost an IRA for renters

Here’s what we propose to turn a noble but flawed idea into a solid and profitable plan.

Provide a tax credit/deduction equal to 10-20% of the total rent successfully paid each year. But the proceeds are not distributed directly to the renter.

Instead, those proceeds are automatically deposited into a special tax-exempt account, and they could only be withdrawn for specific purposes — like a down payment on a home, and perhaps educational expenses and retirement costs.

Sound familiar? It’s similar to an IRA or 529 account. But for renters. IRAs already have a long track record of success, so it’s not like we’re proposing a radical and untested idea.

There is a new twist, however. We recommend the proceeds in these special accounts be invested in a new type of U.S. Savings Bond that throws off 1-2% interest and could be dedicated to incentives for building affordable housing — both rental and single-family.

Imagine that builders could get loans at less than market rates but greater than the interest rate for funds accruing in these special accounts. In other words, interest income from loans to builders would be greater than interest paid on the special accounts.

The entire program would be revenue neutral!

The devilish details

It’s impossible to sum up a new government program in anything less than 100 pages. (According to GovTrack, “Congress has typically enacted 4-6 million words of new law in each two-year Congress.”)

So we’d be happy to explain the details to anyone who’s interested. By June 2024 — which is the next National Housing Month — we hope to convince South Florida lawmakers to explore and hopefully champion this idea. Because everyone deserves a place to call home.

Sandra Tobon is director of housing counseling and Barry Rothman is housing counseling program manager for Consolidated Credit, one of the nation’s oldest and largest nonprofit credit counseling agencies.