This study examined the impact of Federal tax law on rental housing with respect to the production of new middle income rental housing, the maintenance and rehabilitation of existing rental housing, the conversion of existing rental housing to condominiums or other uses, and tenants residing in rental housing or prospective tenants of rental housing. Also addressed is the potential impact of the Economic Recovery Tax Act (ERTA) of 1981 on rental housing investment. The report begins with a description of Federal tax incentives and rental housing and the institutional setting underlying rental housing production: the rental housing industry and its principal participants. The report considers the effects over time of incentives created by the Internal Revenue Code on decisions by investors and owners that relate to the production of new rental housing, the maintenance and conversion of existing stock, and ultimately, to rents charged tenants. In addition, it considers whether ERTA has restored the tax advantages to rental housing that have been eroded over the past several years. Footnotes, charts, and tabular data are given.
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