Tax News

CCH (cch.taxgroup.com) reports:

  House lawmakers on July 22 circulated an updated package of $17.8 billion in housing tax provisions that could be added to the housing tax bill (HR 3221) that recently passed the Senate (TAXDAY, 2008/07/14, C.1). According to an unofficial summary of the Ways and Means Committee proposal obtained by CCH, the House has proposed requiring credit card information return reporting by merchants that would raise $9.082 billion. It would delay the implementation of worldwide allocation of interest rules and raise $7.322 billion. Part of that revenue would cover some of the cost of the Community Development Block Grant program, according to the summary. The bill would also raise $1.394 billion by modifying the exclusion of gains on the sale of a principal residence.

  The House proposal also includes a refundable first-time homebuyer credit estimated to cost $4.853 billion over 10 years, an additional standard deduction for real property taxes that would cost $1.537 billion, and a plan to simplify and increase the low-income housing tax credit program and the tax-exempt bond program at a cost of $1.946 billion. The House has also proposed treating certain federally guaranteed municipal bonds as tax-exempt bonds ($126 million), a temporary increase in mortgage revenue bonds ($1.475 billion) and alternative minimum tax (AMT) relief.

  The proposal would also protect Social Security numbers in real estate transactions ($20 million), encourage the rehabilitation of government-leased buildings ($96 million), and reform rules for real estate investment trusts ($359 million). The proposal also includes a plan to expand the Gulf Opportunity Zone tax incentives ($1.333 billion) and to allow taxpayers to accelerate the recognition of historic AMT/research and development credits ($966 million).

  The House proposal was circulating on the same day that the Congressional Budget Office (CBO) released a letter estimating that an administration plan to bail out Fannie Mae and Freddie Mac would cost an estimated $25 billion. The CBO said that only a 50-percent chance exists that the bailout will actually require federal funding. Lawmakers are expected to add the administration proposal to the housing bill. The whole bill is expected to come to the House floor for a vote during the week of July 21.

  By Stephen K. Cooper, CCH News Staff