Plan offers no relief to homebuilding industry

WASHINGTON – House Democrats are crafting a response to the nation’s housing crisis that would offer tax breaks to homeowners, first-time homebuyers and developers of low-income housing but would not provide tax relief to the struggling homebuilding industry.

The measure, expected to be unveiled today, puts the House at odds with Senate leaders, who last week agreed on a bipartisan housing plan that includes billions of dollars in tax refunds for homebuilders, lenders and other money-losing businesses.

“We need to provide relief to the buyers and families themselves, not just the banks and builders,” House Ways and Means Committee Chairman Charles B. Rangel, D-N.Y., said Monday in a statement. “The House bill will put families first.”

The House proposal would create a temporary tax credit of as much as $8,000 for first-time buyers and would increase the availability of tax credits for investors in low-income housing, according to senior Democratic aides. Like the Senate bill, it would create a standard deduction for property taxes that would assist more than 28 million homeowners who do not itemize on their federal tax returns. And it would expand the authority of state and local housing finance agencies to use tax-exempt bonds to refinance troubled mortgages.

To cover the cost of the legislation – about $11 billion over the next decade – the House proposal would require brokers to report the purchase price as well as the sales price of stocks and other instruments subject to the capital gains tax. It also would delay for one year the implementation of certain tax benefits for multinational corporations.

Rangel has scheduled a committee meeting for Wednesday to consider the legislation. If approved, House leaders hope to pair the tax package with an ambitious proposal to permit the Federal Housing Administration to underwrite up to $300 billion in loans for borrowers who can’t meet the obligations of their current mortgages.

House Financial Services Committee Chairman Barney Frank, D-Mass., plans to hold hearings this week on that proposal, which is aimed at giving lenders a powerful incentive to forgive a portion of the debt on troubled mortgages and saving more than a million homeowners from foreclosure.