The U.S. Senate today passed by a wide margin a bill crafted to help stop the decline in the nation's housing markets, including $25 billion in tax breaks aimed at home builders and other businesses affected by the downturn.
The vote, 84 to 14, reflected the bipartisan roots of the bill. However, leaders in the House, which is now working on its own housing relief bill, have signaled that several provisions in the Senate version, including the business tax breaks, will not survive. The White House has also taken issue with the tax provisions in the bill, as have several Wall Street analysts, who believe the tax rebates would do nothing to improve the oversupply of houses on the market.
As passed, the bill would provide $25 billion in tax relief by allowing home builders and other businesses to carry back losses for two additional years, to 2004, to recoup taxes paid when business was booming. By some estimates, that could mean up to $500 million to some public home builders.
It also would provide a $7,000 tax credit for people who buy foreclosed properties and $4 billion for municipalities to buy and fix up abandoned homes. It also includes money for counseling and stronger loan disclosure requirements, $10.9 billion for tax-free mortgage revenue bonds backed by the FHA and a call for modernization of that agency.
The builder lobby was pleased with the passage but appeared realistic in its expectations as it shifted its support behind a temporary tax credit for home purchases, an initiative that many believe would help draw down excess inventory of homes for sale. Such a credit was enacted in the 1970s and was credited with lifting the housing business out of a deep slump.
"The bills passed this morning by the full Senate and yesterday by the House Ways and Means Committee are an important step in the process of enacting comprehensive housing legislation that will shore up housing and the economy," said Jerry Howard, CEO of the National Association of Home Builders, in a prepared statement. "Enacting a broad, temporary tax credit for the purchase of a home would provide the best stimulus for housing and the economy," he said. "We urge House and Senate lawmakers to keep this in mind as they move to bridge their differences."