Provide tax credit to landlords that rent for below market rate
Summary
HB 306 would create a new Montana income tax credit for property owners who rent a dwelling below market rate. The credit would be available to both individual and corporate taxpayers, including pass-through entities, and would apply when rent charged is less than 110% of the county fair market rent as published by HUD. The credit amount would equal $200 for each $100 that 110% of fair market rent exceeds the monthly rent, subject to the taxpayer’s income tax liability and a three-year carryforward.
To qualify, the rental unit must be under at least a one-year lease and meet federal housing quality standards for the Housing Choice Voucher program. The bill also bars the credit if the rent is already restricted through another program that benefits the property owner for limiting rent, and it authorizes the Department of Revenue to disallow claims where the landlord and tenant are not dealing at arm’s length. Taxpayers would need to provide lease or receipt documentation and utility information if applicable. The bill states its purpose is to incentivize landlords to provide affordable rental housing.
Impact
The bill would add a new tax credit to Montana’s income tax laws in Title 15, chapters 30 and 31, and would amend the state’s tax credit review statute, 15-30-2303, to place the new below-market-rent credit on the list of credits subject to periodic legislative review. It would apply beginning with income tax years after December 31, 2025, and would affect both individual and corporate income taxpayers, including owners operating through partnerships, S corporations, and other pass-through entities. The measure would also create new administrative and documentation requirements for claiming the credit and give the Department of Revenue authority to verify and deny claims.
Sentiment
The bill’s available voting history suggests limited visible opposition at the committee stage, with the House Taxation committee voting 21-0 to table the bill. That action indicates the proposal did not advance, despite the bill’s stated goal of encouraging affordable rental housing. No committee transcript is available, so the record does not show detailed debate or public testimony in the provided materials.
Contention
The main policy tension in HB 306 is whether a tax credit is an effective way to increase affordable housing supply or whether it would primarily subsidize landlords for behavior they might already choose to do. The bill itself anticipates this concern by excluding units already subject to other rent-limiting programs and by requiring the Revenue Department to examine arm’s-length transactions. Potential points of contention also include the fiscal cost of the credit, the complexity of verifying fair market rent and utility charges, and whether the benefit would reach tenants indirectly through lower rents or instead accrue mainly to property owners.