American Housing Rescue and Foreclosure Prevention Act of 2008

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American Housing Rescue and Foreclosure Prevention Act of 2008

On July 26, 2008, Congress passed the American Housing Rescue and Foreclosure Prevention Act of 2008. President Bush signed the measure into law on July 30.

The legislation, H.R. 3221, the American Housing Rescue and Foreclosure Prevention Act, would help stem the tide of foreclosures, stabilize local housing markets and provide incentives for first-time homebuyers. Chairman Rangel, a longtime advocate and leader for improved access to low-income housing was the author of the tax provisions contained in the bill.

“This bill received strong bipartisan support because it is the right thing to do for our country during this economic downturn,” said Chairman Rangel. “Provisions in this bill represent the most significant expansion and improvement of tax programs designed to provide affordable housing for low and moderate-income individuals since the inception of the low-income housing tax credit in 1986.”

“First, the bill would expand and improve the low-income housing tax credit, which is the largest source of federal support for the construction and rehabilitation of affordable housing,” continued Rangel. “Second, the bill increases volume limits on housing bonds to finance low-income rental housing and first-time homebuyers, while also providing states with greater flexibility on how to use those bonds efficiently. These improvements will go a long way to address the shortage of affordable housing options in our cities and towns.”

  • The Low-Income Housing Tax Credit (LIHTC) has been responsible for the development of over 2 million rental units across the nation since its inception in 1986.
  • The LIHTC is the most successful, longest running Federal program for supporting the development of affordable rental housing.
  • Included in the package is a ten percent increase in the credits allocated among states, and an $11 billion increase in tax exempt bond authority to support single family and rental housing, as well as many changes in the tax code to make the use of the LIHTC more efficient. Housing advocates agree these changes will result in additional units of housing and, especially, more units for lower-income families.
  • Also included in the package is a provision to enable cities and towns to more efficiently use tax-exempt bonds in the effort to develop affordable rental housing. The provisions will enable New York City to issue significantly more bonds so that it can support the development of thousands more rental units for low-and moderate-income families.

Below are the main tax provisions included in H.R. 3221:

  • 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 is phased out for taxpayers with adjusted gross income in excess of $75,000 ($150,000 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 $500 ($1,000 for joint filers) for State and local real property taxes. This provision applies for tax year 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 ten percent. 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 The bill would also allow for the issuance of an additional $11 billion of tax-exempt bonds to refinance sub-prime loans, provide loans to first-time homebuyers and to finance the construction of low-income rental housing.

This legislation is supported by a broad group of advocates for affordable housing.

Source: House Ways and Means Committee

Supporting Documents

Housing Assistance Act - Related Article

Related Discussions

Alternate Names
This bill is referred in a number of ways. In the legislation, it's called the "Housing and Economic Recovery Act of 2008" but after it became PL 110-289, it's often referred to in the related guidance as the "Housing Assistance Tax Act of 2008," or simply the "housing assistance act."

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