Late yesterday, the Senate Finance Committee passed their version of an economic stimulus package—the Economic Stimulus Act of 2008. While the Senate bill does not contain the temporary increase in mortgage limits for Fannie Mae, Freddie Mac and the FHA that appears in the House bill passed earlier this week, the Senate version does include significantly more housing-specific components than does the House bill. The Senate will likely consider the Finance Committee's bill today—Thursday. It's important that you contact your Senators as soon as possible and ask them to support this important legislation.
The Phone Call
Call your US Senators using the Capitol Switchboard at (202) 224-3121 with this simple message:
SUPPORT THE SENATE FINANCE COMMITTEE ECONOMIC STIMULUS PACKAGE.
The favorable components include:
1. Expands the net operating loss (NOL) tax deduction to five years for business losses incurred in 2006, 2007 and 2008.
2. Expands the Mortgage Revenue Bond Program (MRB) with a special ten billion dollar allocation of bonds.
3. Extends for one year the new home energy efficiency tax credit.
The Details
The House this week passed an economic stimulus package that was hammered out with the administration over the weekend of January 26 and 27. This package has two important omissions. First, the original agreement included adoption of the FHA reform legislation that the House passed in the spring of 2007 and that NAHB supported. Unfortunately, for reasons as yet undetermined, the administration and the House leadership agreed to remove the FHA reform component. Second, during final negotiations, the House leadership dropped an expansion of the Net Operating Loss (NOL) carryback period, a provision which NAHB also supported.
The only housing element of any significance remaining in the House package would temporarily increase mortgage limits for Fannie Mae, Freddie Mac and the FHA. The House package would increase both the FHA and the conforming loan limits for GSEs to 125% of the area median house price, up to a maximum of $729,750. FHA limits currently are set at 95% of area median price with a cap of $362,790, while the conforming limit is established nationwide at $417,000. The boost in GSE and FHA mortgage limits would run only through the end of 2008.
The Senate Finance Committee's version of economic stimulus—the Economic Stimulus Act of 2008, does not contain the mortgage limit increases, but does include some more housing-specific components. These include:
Expansion of the net operating loss (NOL) deduction carryback period from two to five years for losses incurred in tax years 2006, 2007 and 2008. (It's worth noting that this provision also contains a specific benefit for NOL carrybacks claimed by small builders who pay the Alternative Minimum Tax (AMT)),
Expansion of the Mortgage Revenue Bond (MRB) program with a special allocation of bonds for both refinancing and new mortgage lending,
Extensions of several energy efficiency tax credits for real estate, including the new energy efficient home tax credit (one year), energy efficient commercial building deduction (two years) and the existing homes credit (one year),
Establishes a 50 percent bonus depreciation, and Increases Section 179 small business expensing.
Finally, the bill's largest provision is a $126 billion tax rebate for individual taxpayers. The rebate is equal to $500 for single taxpayers, $1000 for married taxpayers, with $300 for each child and an income phaseout of $150,000 for single taxpayers and $300,000 for married taxpayers.
If you have any questions please email builderlink@nahb.com.