Housing Assistance Tax Act Introduced In US House

by Leroy Baker, Tax-News.com, New York

09 April 2008

US House Committee on Ways and Means Chairman Charles Rangel (D-NY) on Tuesday introduced legislation to provide tax credits to first-time homebuyers, improve access to low-income housing and allow families to deduct property taxes.

The legislation, known as the Housing Assistance Tax Act of 2008, aims to help offer stability to the housing market while assisting families in the purchase of their first homes, and improving access to affordable housing. The bill was scheduled to be considered by the Ways and Means Committee on Wednesday, and by the full House of Representatives in the coming weeks.

The Housing Assistance Tax Act of 2008 is designed to complement efforts by the House Committee on Financial Services to address the growing rate of foreclosures nationwide.

However, the legislation differs from a similar version recently introduced in the Senate, which also includes tax relief for homebuilders and other companies suffering at the hands of the market downturn.

"We need to provide relief to the buyers and families themselves, not just the banks and builders," argued Rangel.

"The House bill puts families first - offering a refundable tax credit to first-time homebuyers, essentially a zero-interest loan to help defray the cost of purchasing a house. The bill will also expand and improve the successful low-income housing tax credit to put builders to work and create affordable alternatives for families seeking new housing," he added.

Below are the main provisions of the Housing Assistance Tax Act of 2008:

• First-time homebuyer tax credit to assist in making a down payment on a home. This would provide individuals and families with a refundable credit (equivalent to an interest-free loan) of 10% of the purchase price of their home (up to USD7,500). Taxpayers would be required to repay any amount received under this provision to the government over 15 years in equal installments. The credit will be phased out for taxpayers with adjusted gross income in excess of USD70,000 (USD110,000 in the case of a joint return).
• Additional standard deduction for real property taxes to help homeowners who claim the standard deduction, by allowing them to claim and additional standard deduction of up to USD350 (USD700 for joint filers) for State and local real property taxes. This provision applies for 2008.
• Temporary increase in low-income housing tax credit and simplification of the credit. The bill would increase the current limit of the credit from USD2.00 for each person residing in a state by an additional 20 cents per resident. This will help put builders to work to create new options for families seeking affordable housing alternatives. The credit will also be simplified to improve its effectiveness.
• Temporary increase in mortgage revenue bonds to allow for the issuance of an additional USD10bn of tax-exempt bonds to refinance subprime loans, provide loans to first-time homebuyers and to finance the construction of low-income rental housing.

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