Rangel Welcomes Bush's Signature On Housing Tax Package

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

01 August 2008

Ways and Means Committee Chairman Charles Rangel (D-NY) has hailed Tuesday`s signing into law of a package of housing market-boosting tax incentives, saying that it will go a long way in addressing the shortage of affordable housing options across the United States.

Commenting on President Bush's signing of the American Housing Rescue and Foreclosure Prevention Act (H.R. 3221) on Wednesday, Rangel stated that:

“This is the right thing to do for our country during this economic downturn. This law expands and improves the low-income housing tax credit, which is the largest source of federal support for the construction and rehabilitation of affordable housing. It also increases volume limits on housing bonds to finance low-income rental housing and first-time homebuyers, while also providing states with greater flexibility on how to use those bonds efficiently."

House Speaker Nancy Pelosi thanked Rangel and other Congressional members for assembling the bipartisan coalition that created a comprehensive package of measures aimed at stemming the tide of foreclosures, stabilizing local housing markets, providing incentives for first-time homebuyer and increasing access to affordable housing for low-income communities.

"I also want to thank Treasury Secretary Henry Paulson, who worked closely with Democrats in Congress to pass this legislation and ensured that the President would sign it into law," she stated.

The bill provides a 10% increase in the credits allocated among states, and an USD11bn increase in tax-exempt bond authority to support single family and rental housing. Also included in the package is a provision to enable cities and towns to more efficiently use tax-exempt bonds in the effort to develop affordable rental housing.

The Affordable Housing Tax Credit Coalition, a trade group representing many of the public and private sector participants in the affordable housing tax credit industry, also praised Rangel`s leadership in getting what they termed as critically important improvements to the the federal Low-Income Housing Tax Credit (LIHTC). Over 2 million rental units across the nation have been developed through the LIHTC measure since the Rangel-sponsored measure was passed in 1986.

"The housing tax credit is the single most important federal program supporting the development and preservation of affordable rental housing, the need for which continues to grow," commented Richard Goldstein.

The tax provisions in the legislation include:

• 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 is phased out for taxpayers with adjusted gross income in excess of USD75,000 (USD150,000 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 an additional standard deduction of up to USD500 (USD1,000 for joint filers) for State and local real property taxes. This provision applies for tax year 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 10%. 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 - The bill would also allow for the issuance of an additional USD11bn of tax-exempt bonds to refinance sub-prime loans, provide loans to first-time homebuyers and to finance the construction of low-income rental housing.

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