Congressman Neal supports housing assistance bill

(Washington, D.C.) Congressman Richard E. Neal, Chairman of the House Ways & Means Subcommittee on Select Revenue Measures, today supported Committee passage of the Housing Assistance Tax Act of 2008, H.R 5720. Introduced by Ways & Means Chairman, Charles B. Rangel (D-NY), the bill provides tax credits to first-time homebuyers, improves access to low-income housing and allows families to deduct property taxes as well as other provisions. During committee consideration of HR 5720, Neal successfully offered an amendment that would increase the beginning of the phase-out of eligibility for the first-time homebuyer tax credit for joint filers to $140,000 (up from $110,000).

“As the foreclosure crisis continues across America, I was proud to support a bill to help those most in need of help. Springfield alone has already had over 300 foreclosures this year and will have over 2,000 mortgages reset to higher rates through 2009, which could mean many more foreclosures to come. Clearly, Congress needs to do more, but today’s tax bill was an important first step for homeowners and the housing industry in general,” said Neal.

To address the growing foreclosure rate nationwide, it is expected that HR 5720 will be combined with legislation from the House Financial Services Committee and voted upon by the full House in the coming weeks. This legislation will assist in bringing stability to the troubled housing market and help families purchase their first home as well as improve access to affordable housing. During the markup, Neal offered an amendment to change the provision for first-time homebuyers so that the income level at which married couples begin to phase out of the credit is twice that of single taxpayers.

“I was pleased that the Committee accepted my amendment to eliminate any marriage penalty in the nationwide first-time homebuyer credit. It has been estimated that my amendment will mean an additional 500,000-700,000 married couples buying their first house will be eligible for this important tax credit. This provision was highly sought after by both homebuyers and the housing and real estate industry as that industry has really suffered in these tough economic times,”said Neal.

Below are the main provisions included in 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 ten percent of the purchase price of their home (up to $7,500). Taxpayers would be required to repay any amount received under this provision to the government over 15 years in equal installments. The credit will begin to phase out for taxpayers with adjusted gross income in excess of $70,000 ($140,000 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 $350 ($700 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 $2.00 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 $10 billion of tax-exempt bonds to refinance subprime loans, provide loans to first-time homebuyers and to finance the construction of low-income rental housing.