Housing bill includes tax relief provisions for Gulf Coast
WASHINGTON — The United States Senate today to move forward on a housing bill that includes a provision authored by Sen. Mary L. Landrieu, D-La., to provide $1.3 billion in tax relief to Gulf Coast homeowners and businesses recovering from the 2005 hurricanes. The Senate voted 83-to-9 on a procedural vote. Sen. Landrieu voted with the majority to consider the legislation, which will continue to be debated throughout this week. Sen. David Vitter, R-La., was one of only nine senators to vote against considering the bill.
“Today the Senate moved in the right direction for Gulf Coast homeowners who were hit with a tremendous tax burden while struggling to recover from hurricanes Katrina and Rita,” Sen. Landrieu said. “Many of our homeowners faced tax bills this spring on their Road Home grants, which was never intended. But this bill will relieve them of $1 billion that the federal government overtaxed them.”
The “Road Home Tax” assistance would apply to homeowners who took a casualty loss deduction on their 2005 federal tax returns to account for damage to their homes following Hurricanes Katrina and Rita. These homeowners were subsequently required by the Internal Revenue Service (IRS) to pay income tax on their rebuilding grants.
In April, the Senate passed language by Sen. Landrieu to allow homeowners who took the 2005 casualty loss deduction to amend their 2005 return by repaying whatever savings they received. Their rebuilding grant income would then be tax-free. This month, the Senate voted against two tax extender bills that included a “Road Home Tax” relief provision. Sen. Landrieu voted to consider both bills with the critical tax relief.
The housing bill also includes a Sen. Landrieu provision benefitting Gulf Coast businesses by removing the deadline under which they are required to begin construction of new ventures in hurricane-affected areas in order to benefit from Gulf Opportunity Zone (GO Zone) bonus depreciation tax benefits. Currently, only projects that began before December 31, 2007 are eligible for the tax relief. Under the Landrieu plan, no commencement deadline would exist.
The housing package is intended to help relive the housing crisis and broadens the Federal Housing Administration’s programs to back refinanced loans. The House will also consider the bill in the coming weeks. President Bush has issued a veto threat over the bill because of a provision providing grants to states for foreclosed property rehabilitation.
“It is crucial that this bill be sent to the President’s desk as soon as possible, and I am working with my colleagues to ensure that happens,” Sen. Landrieu said.