The House's Version of Housing StimulusApril 9, 2008 - by Donny Shaw
The House of Representatives is acting quickly to finish the Senate’s Housing Stimulus bill. On Wednesday the House Ways and Means Committee approved their version of the bill, the Housing Assistance Tax Act of 2008, by a bipartisan vote of 35-5. Some of its proposals for helping struggling homeowners and the housing market in general are similar to what the Senate’s approve in their bill. But unlike the Senate bill, the House’s new bill includes a way for the government to raise enough money to offset the entire cost of what it provides.
Here’s a quick rundown of what this bill from the House would provide:
- A tax credit for first time home buyers equal to 10 percent of the price of a home up to $7,500. The credit would have to be paid back to the government over 15 years in equal installments. It would be available for one year from the date the bill is enacted.
- An extension of standard property tax deductions – $350 for single filers and $700 for joint filers – in 2008 for the estimated 28 million homeowners who do not itemize on their taxes. (The Senate’s bill contains a similar provision, but would provide slightly more – $500 for single filers and $1,000 for joint filers.)
- An increase in the amount of Federal low-income housing tax credits that may be given out by each state in 2008 and 2009. Currently, the limit is set at $2.00 for each person residing in the state. This bill would increase that limit by an additional 20 cents for each person
residing in the state.
- A $10 billion increase in the amount of tax-exempt mortgage revenue bonds that state housing agencies can use to refinance subprime mortgages, make loans to first-time buyers and for the construction of low-income rental housing. This would apply only for 2008 and mirrors a provision in the Senate bill.
- Simplification of some technical rules relating to tax-exempt housing bonds that states use to finance the building of low-income housing projects. (Try as I may, I don’t really understand this part. Can anyone explain in the comments?)
And to make back the money that would be spent on the above proposals:
- A Bush administration proposal to require brokers to report to the IRS the cost basis for transactions involving publicly traded securities (i.e. stocks, mutual funds, bonds). The thinking behind this is that requiring brokers to maintain records of these transactions to report to the IRS would boost compliance with capital gains reporting, and thus tax collection. This is estimated to raise $8.05 billion over 10 years.
- A one-year delay in the implementation of a new, liberalized rule for allocating interest between U.S. sources and foreign sources for purposes of determining a taxpayer’s foreign tax credit limitation. Delaying this new rule is estimated to raise $2.93 billion over 10 years.
This bill will now move to a vote by the full House. It’s expected to pass pretty easily, and once it does, it will have to be reconciled with the Senate’s version before going to President Bush to be signed into law. We’ll keep you posted.