House Passes Compromise Housing Legislation

On July 23, 2008, by a vote of 272 to 152, the House passed the Housing and Economic Recovery Bill of 2008, legislation that addresses the housing and mortgage crisis and includes a tax title. Included in the tax title of the legislation are: an additional standard deduction for property taxes for homeowners who do not itemize; a new refundable tax credit for first-time home buyers; an increase in funding for mortgage revenue bonds and in the amount of federal low-income housing tax credits; repeal of the AMT limitations on tax-exempt housing bonds, low-income housing credit, and the rehabilitation credit; REIT modernization rules; some GO Zone incentives; and a provision for AMT and R&D Credit monetization.

Revenue offsets for the legislation include expanded information return reporting by banks on annual credit card sales, a restriction on the sale of a principal residence exclusion to reflect the time the home was used as a vacation or rental property, a delay in implementation of worldwide interest allocation, and modifications to corporate estimated tax due dates.

The Senate is expected to pass the legislation as soon as July 26, 2008, and the President has removed his veto threat and agreed to sign the legislation.