[StBernard] Senate Passes Landrieu Tax Cut for Gulf Coast Homeowners

[Westley Annis]

Senate Passes Landrieu Tax Cut for Gulf Coast Homeowners
$1.1 billion tax relief amendment to housing bill would eliminate so-called
"Road Home Tax," spur business investment.

 

WASHINGTON - The United States Senate today overwhelmingly passed a measure
by U.S. Senator Mary L. Landrieu, D-La., to lift an onerous tax burden from
thousands of Gulf Coast homeowners who received rebuilding grants following
Hurricanes Katrina and Rita.  The amendment to H.R. 3221, a bill to help
relieve the nationwide housing and mortgage crises, was cosponsored by
Senators Thad Cochran, R-Miss., David Vitter, R-La., and Roger Wicker,
R-Miss.

"When Congress passed the critical funding to make rebuilding grants
available to Gulf Coast homeowners, the intent was never for people to face
a hefty tax bill on their recovery," Sen. Landrieu said. "The Senate stepped
up in an impressive, bipartisan way today to set this right.  We now need
the help of our House delegation to make this relief 100 percent secure, but
we are a significant step closer to eliminating the 'Road Home Tax' once and
for all."

In total, the measure will provide $1.1 billion in tax relief to Gulf Coast
homeowners and businesses.

The amendment required 60 votes to overcome another Senator's objection to
its cost.  The objection was cast aside by a 74-to-5 vote and the amendment
subsequently passed in a voice vote.  The underlying housing bill will
continue to be debated today and into next week.

Homeowners who took a casualty loss deduction on their 2005 federal tax
returns to account for hurricane damage to their homes have been required by
the Internal Revenue Service (IRS) to pay income tax on subsequent
rebuilding grants.  In Louisiana, those grants come through the Road Home
program, and can push these affected homeowners into a higher tax bracket.
As a result, they may be required to pay a tax far greater than any refund
or reduction they received on their 2005 return due to their casualty loss
deduction.

The Landrieu amendment would allow homeowners who took the 2005 deduction to
amend their 2005 return by repaying whatever savings they received with only
one year of interest.  Their rebuilding grant income would then be tax-free.


If the housing relief bill is signed into law with the Landrieu amendment
intact, homeowners are urged to consult a Certified Public Accountant or
other tax professional to determine how it will affect their returns.

The amendment also extends the deadline under which businesses are required
to begin construction of new ventures in the hurricane-affected areas in
order to benefit from Gulf Opportunity Zone (GO Zone) bonus depreciation tax
benefits.  Currently, only projects that began on December 31, 2007 were
eligible for the tax relief.  Under the Landrieu amendment, no commencement
deadline would exist. 

"Businesses and families alike along the Gulf Coast know well that our
recovery is far from complete, and the need to encourage fresh investment
remains as strong as ever," Sen. Landrieu said.  "This measure, which I was
proud to craft with my Republican colleagues from Mississippi, simplifies
the GO Zone rules to make it clear: economic recovery is not about when
first shovels go into the ground, it's about when doors can open for
business.  This tax relief will spur more investment and business
construction in the areas that need the economic boost the most."

Of the $1.1. billion, the GO Zone extension would provide an estimated $308
million in additional benefit to Gulf Coast businesses and residential
development. The amendment also includes $65 million in tax benefits to
areas affected by the 2007 Kansas tornadoes.

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