US Tax Relief for Banks and Homebuilders
In an aggressive effort to help home builders and struggling owners, the US Senate passed a combination of tax breaks to address the dwindling housing market.
The senate passed a regulation by allowing a $25.5B new property tax deduction to relieve the banks and homebuilders and a $7,000 tax credit for a purchase of a foreclosed home.
(picture taken from www.larealestateblog.net)
Despite the majority of the senate voting 84-12, the chances of the legislation becoming law is very slim. Some senate republicans and the white house have criticized the various aspects of the housing bill. In a letter sent to the White House speaker Nancy Pelosi, “We must not prolong necessary corrections in the housing market, bail out lenders or subsidize irresponsible borrowing and lending”.
The most controversial provision in the bill would allow businesses to offset their losses this year and next year against gains made from previous years, which may help homebuilders and financial firms that made billions during the good times and are now facing insurmountable losses and writedowns.
This has angered some conservatives and other housing groups who believe that these businesses do not deserve a bailout.
The White House is pushing forward its own package stimulus proposals which includes, tax credits for first time home buyers, increased housing assistance for low income rental housing and modest property tax deductions.
House democratic leaders hope to pass their legislation by the end of the month.
