Foreclosure Prevention Act of 2008 – S
enate passes housing stimulus bill
Mike Habib, EA
On Apr. 10, the Senate by a vote of 84 to 12 approved H.R. 3221, the “Foreclosure Prevention Act of 2008,” the Senate housing stimulus bill. Before final passage of the bill, the Senate approved an amendment offered by Senator John Ensign (R-NV) that would extend various clean energy production incentives.
Key provisions in the bill would:
(1) Extend the net operating loss (NOL) carryback for losses incurred in tax years 2008 and 2009 from the two year carryback permitted currently to four years (back to 2004 and 2005, respectively) to aid homebuilders and other businesses hit hardest by the economic slump. Taxpayers would be given the choice of (a) electing the longer NOL carryback, or (b) claiming the larger expensing allowance and bonus first year depreciation authorized by the Economic Stimulus Act of 2008.
(2) Modernize the tax rules for real estate investment trusts (REITs) to provide them with flexibility to reflect recent changes in real estate markets.
(3) Allow businesses unable to benefit from bonus depreciation due to extended periods in a loss position to receive refunds of alternative minimum and research and development credits when they make investments.
(4) Create a new standard deduction for property taxes paid by nonitemizers. The deduction, available only for tax years beginning in 2008, would be $500 for single filers and $1,000 for joint filers. This relief would not be available if the rate of tax for all residential real property taxes in the jurisdiction is increased after Apr. 2, 2008, and before Jan. 1, 2009.
(5) Create a tax credit for taxpayers who buy foreclosed single-family homes and use them as their principal residences. The credit would be: available for the purchase of only one home; up to $7,000 of the cost of the home; claimed ratably over two tax years; and available for purchases made within a one year period beginning after the date of enactment. Eligible single-family homes would be those upon which foreclosure has been filed under state law, and that: (a) are new, previously unoccupied residences for which a building permit was issued and construction began before Sept. 1, 2007; or (b) were occupied as a residence by a mortgagor for at least one year before the foreclosure filing.
(6) Allows victims of Hurricanes Katrina and Rita to adjust casualty loss deductions taken in addition to grant payments to cover uninsured losses caused by the hurricanes. The provision would allow the use of amended income tax returns to take into account receipt of certain hurricane-related casualty loss grants by disallowing previously taken casualty loss deductions. The provisions also would waive the deadline on the construction of GO Zone property which is eligible for bonus depreciation.
(7) Increase the overall allocation to mortgage revenue bonds by an additional $933 million.