A new bill hopes to provide some relief to Tenants who are faced with steeply rising rental costs, by giving them a tax break.  If approved, the bill would allow Tenants to deduct what they pay for rent from their federal taxes.

Rep. Alan Grayson, a Democrat from Florida — who introduced the bill — cites the following example: Average taxpayers paying about $1,500 a month – or $18,000 a year – could possibly save $4,500 annually through the deduction if they fall in the 25 percent tax bracket.

Landlords can deduct on their taxes their cost to hire a professional property management firm, the interest they pay on their mortgages as well as their property taxes. For a homeowner in the 25 percent tax bracket who is deducting $10,000 of interest that could add up to $2,500 in savings.

“Tenants should be able to share in the tax savings,” Grayson argues. “This is a tax benefit that would go primarily to people who need it.”

But critics to the bill argue that providing tax incentives to Tenants would take away a strong incentive for buying a home. Also, they say many states already have their own tax credit programs for Tenants, such as ones geared to helping low-income or elderly residents.

Tenants who are looking to get out of a rental home and become homeowners could be helped with this because it will lower their housing costs. The savings could be put toward a down payment.