Senate bill targets senior homeowner tax credit for aging-in-place modifications

A new proposal in the Senate is targeting senior homeowners looking to age in place more effectively by offering them a tax credit that would pay for essential home modifications.

On Aug. 6, Sen. Kirsten Gillibrand (D-N.Y.) introduced the Senior Accessible Housing Tax Credit Act. The legislation would create a nonrefundable tax credit for Americans ages 60 and older to make specific modifications on primary residences and qualifying second homes.

The bill is co-sponsored by Sen. Angela Alsobrooks (D-Md.). A companion bill was introduced in the House in late June by Rep. George Latimer (D-N.Y.).

The credit would be equal to the cost of eligible expenses, up to $10,000. Qualifying expenses would also encompass labor costs related to the preparation, assembly or installation of an eligible modification. It would allow senior homeowners to incorporate a variety of aging-in-place features — such as wheelchair ramps, handrails, chair lifts and shower seats — without taking on additional debt, tapping into savings or accessing their home equity.

According to a press release from Gillibrand’s office that cites U.S. Census Bureau data, an estimated one in four Americans will be 65 or older by 2060. Today, about 44% of the 65-and-older population has a disability, according data from the Centers for Disease Control (CDC).

But even as the nation ages and the need for safe housing to accommodate their needs rises, only about 4% of U.S. housing stock is properly designed for access by those with disabilities, according to estimates from the Joint Center for Housing Studies (JCHS) at Harvard University.

Last week, Gillibrand also introduced the Visitable Inclusive Tax Credits for Accessible Living (VITAL) Act, which would expand the existing Low-Income Housing Tax Credit (LIHTC) program to support additional construction of affordable homes with accessibility features. That bill is co-sponsored by Sen. Amy Klobuchar (D-Minn.), while a companion bill was introduced in the House by Democratic Reps. Dwight Evans and Brian Fitzpatrick of Pennsylvania.

“A safe, accessible place to live should be a right, not a privilege, for our seniors,” Gillibrand said in a statement. “The VITAL Act would help ensure that affordable housing meets the mobility and accessibility needs of New York seniors and people with disabilities, allowing them to age comfortably in the communities of their choice.

“Additionally, the Senior Accessible Housing Tax Credit Act would help seniors age with dignity by assisting with the cost of home modifications related to mobility needs. As the top Democrat on the Senate Aging Committee, I am committed to doing everything I can to remove barriers to accessible housing, and I’m fighting hard for these bills to pass.”

Who’s eligible for the senior tax crdit?

According to reporting by Forbes, the Senior Accessible Housing Tax Credit Act currently includes language that would limit eligibility to homeowners who turn 60 by the end of the taxable year in question. Exemptions exist for those who file joint tax returns and those who have a spouse who turns 60 by the end of the taxable year.

Importantly, the tax credit would also be tied to income. The maximum credit is $10,000, but that amount drops by $1 for every $2 that modified adjusted gross income exceeds thresholds. The thresholds are $150,000 for a head of household, $200,000 for a joint return or $100,000 for those in other tax categories.

As an example, for a household that files a joint return with $205,000 in modified adjusted gross income and exceeds the ceiling by $5,000, the maximum credit would be cut by $2,500, meaning they could get up to $7,500 for eligible modifications. The limits and payouts would be adjusted annually after 2027 based on inflation and cost-of-living adjustments, according to the proposal.

Reporting from Kiplinger notes that “the legislation addresses a gap for older adults because Medicare generally doesn’t cover structural home modifications, like installing wheelchair ramps, widening doorways, or remodeling bathrooms for accessibility. As a result, many homeowners must pay those often substantial costs out of pocket.”

Complement to reverse mortgages?

In a recent interview with HousingWire‘s Reverse Mortgage Daily (RMD), Cameron Carter, the CEO of Houston-based Rosarium Health, said that the vast majority of U.S. homes are not fit for aging in place without modifications.

“I’d be shocked if it was above 5%. Ninety percent of housing was built in this country before the Americans With Disabilities Act (ADA) was even a law, and the ADA only applies to public spaces — not private residences,” Carter said.

“It would behoove us to have a much more accessible housing stock. It would behoove us to have a much more accessible retail stock as well — not only because anyone can use it, but because this growing older adult population is the wealthiest population in the country. They are needing these types of accommodations to be able to travel, to have leisure and to be able to experience life.”

Block Renovation CEO Julie Kheyfets also weighed in on home modifications during an interview with RMD earlier this year, noting that “renovating is usually the most expensive purchase you make, other than buying the home itself.”

“Folks who own their homes prefer to age in place. Most do not want to move into a nursing home and live their last days there. Many people can’t afford to. It’s really expensive,” Kheyfets said. “But their homes might not be great for the older years of life. They might have a lot of stairs. They might have a bathtub that’s hard to climb into. A part of renovating as you age in place is creating accessibility and mobility adjustments.”

Technology to assist with aging-in-place goals is also a consideration for mortgage professionals and their clients. Home Equity Conversion Mortgages (HECMs) and proprietary reverse mortgages, along with a variety of alternative home equity release products, can help senior homeowners pay for these modifications. Tax credits could serve as a complement to loan proceeds.

Smart home technology was the focus of a panel discussion at the National Reverse Mortgage Lenders Association‘s Western Regional Meeting in June.

“Whenever you go to meet with a senior and their family, you definitely should be approaching this conversation from a different angle, and not just the financial tools,” said Danniel Fuchs, CEO of AgeTech Connect’s Los Angeles office. “You’re not there to talk about the reverse mortgage. I understand that’s your business, but when you start to talk like that, you put negativity upfront, instead of actually having that conversation of, ‘How do you see yourself aging?’”