Bigger tax breaks for owners of rental housing and people saving to buy their first home are among housing recommendations being considered by a task force advising President-elect Reagan.
The housing task force, headed by former Housing and Urban Development secretary Carla Hills, also is endorsing more local control over housing assistance and greater flexibility in the types of mortgages available to would-be homeowners.
A preliminary report on these ideas being circulated among task force members was described by one member of the group as basically a compilation of proposals that have been discussed by the advisory group. The task force is to meet in January to develop more specific final recommendations for Reagan, he said, but some of the proposals already have the backing of most of the group.
Some of the ideas have been tossed around before, and some have been approved in various forms on Capitol Hill.
One proposal would allow faster tax write-offs on rental housing, from the current average of 30 or 40 years to 20 years or less. The Senate Finance Committee earlier this year approved this type of plan -- allowing depreciation over 20 years for most rental housing and over 15 years for low-income housing -- as part of its $39 billion tax-cut legislation. That bill will die at the end of this year but is likely to serve as a blueprint for tax legislation next year.
Another idea is to allow tax exemptions or deferrals on the interest on a new form of special housing savings certificates for those saving to buy a home. The plan would be designed to help people save more, which in turn would provide banks and savings and loans with money to lend out in the form of mortgages.
A group of Senate Republicans, including prospective Senate Finance Committee Chairman Robert Dole of Kansas, earlier this year endorsed a similar plan to set up individual housing accounts with taxes deferred on up to $1,500 per person a year saved for housing.
Under the Senate plan, the individual would have to use the savings to buy a home within 10 years or pay all the deferred tax plus a penalty. For those who bought a home, taxes still would be deferred until capital gains were paid on the home when sold.
The Hills task force also has endorsed the use of tax-exempt mortgage revenue bonds for states and local governments to help lower-income residents buy homes.
State and localities now can issue these bonds, paying low interest rates to bondholders because the interest is exempt from federal taxes, and lend out the money at below-market rates for housing. A House-Senate conference committee has approved legislation to allow the use of these bonds, which have flourished in recent years at a rapidly growing cost to the federal government, but only if the proceeds go to first-time buyers of low-or moderate-priced homes or homes in depressed areas.
The task force has decided the use of the mortgage subsidy bonds should at least be limited to benefit only lower-income persons, not now specifically a restriction in the conference committee legislation, due to be approved next week.
To give local governments more flexibility to determine how to use federal housing assistance, the Reagan advisory group backs a block grant approach, rather than having HUD decide how the federal monies should be used. The communities would be able to make the most efficient use of the funds, and would be more likely to rehabilitate and use existing housing than to build new housing, which costs more, one task force member said.
In addition, the block-grant approach would cut down on paperwork and bureaucracy, another primary goal of the advisory group, he added.
The task force also supported the idea of more variety in the kinds of mortgages available, such as graduated-payment mortgages designed for the upwardly mobile who expect to see their incomes keep rising.
Another kind of instrument, a roll-over mortgage, would allow savings institutions to adjust its rates after five years as a hedge against rising inflation rates that make low-interest loans unprofitable. Although mortgagees are not likely to look kindly on home loan rates that can rise, the idea is that lenders might be more willing to lend at lower rates now without having to make sure they take into account future inflation rates.