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California Bill Would Eliminate Tax Deduction on Second Home - ABI

The California state legislature is considering a bill to eliminate a tax deduction for owners of second homes and spending the newly collected revenue on affordable housing, the Palm Beach Desert Sun reported. The bill, A.B. 71, proposes the elimination of the state mortgage interest tax deduction — a policy that allows Californians to deduct any interest they pay on their mortgages from their taxes — for second homes. Assemblymember David Chiu (D-San Francisco), the bill’s sponsor, said that about 31,000 Californians claimed the tax deduction last year, and if collected, those taxes could have totaled $360 million for the state. A.B. 71 would require the state to collect those funds and deposit them into the Low-Income Housing Tax Credit program, a popular mechanism for funding the construction of affordable housing. The structure of the tax program allows developers to leverage federal and private funds, so the $300 million in state funds could allow total investment of more than $1 billion.

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