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U.S. Vice President Kamala Harris delivers remarks during a campaign event at West Allis Central High School in West Allis, Wisconsin, on July 23, 2024. Kevin Mohatt | Reuters

How LIFT can help renters

In today's climate, the LIFT Act could financially benefit renters, as many are part of the income category the tax credit is targeting, according to Francesco D'Acunto, an associate professor of finance at Georgetown University. D'Acunto and other experts suggest the LIFT Act might even be a better aid for renters than the 5% rent cap proposal Biden unveiled on July 16. That proposal calls on Congress to cap rent increases from landlords with 50 existing units or more at 5% or risk losing federal tax breaks.

While the rent cap may lead consumers to believe prices will not increase significantly, it could have negative side effects, such as landlords taking their properties off the rental market, said Karl Widerquist, an economist and professor of philosophy at Georgetown University. Plus, landlords who lose those federal tax breaks will still be able to raise rents, said Jacob Channel, a senior economist at LendingTree. The advantage of the LIFT tax credit, said D'Acunto, is that it doesn't create the same market distortions the rent cap would ignite. "But instead now on the side of the renter, we are actually very directly helping them to defray the effects of rent inflation," he said. Adds Widerquist: "We very often give tax benefits to all homeowners in the name of making it more affordable for people to become homeowners, and we don't give a similar tax break to people who are paying rent. Those are the people who are struggling to become owners."

What the LIFT Act would mean today

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