House committee backs tax bill on housing crisis

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WASHINGTON (Reuters) - The House of Representatives Ways and Means Committee approved on Wednesday a bill proposing a range of tax breaks meant to tackle the nation's housing market crisis.

By Kevin Drawbaugh

WASHINGTON (Reuters) - The House of Representatives Ways and Means Committee approved on Wednesday a bill proposing a range of tax breaks meant to tackle the nation's housing market crisis.

With home prices down and foreclosures soaring, the committee proposed giving first-time home buyers, within income limits, a refundable tax credit of up to $7,500 that would have to be repaid to the government over 15 years.

The temporary tax credit would become available upon enactment of the bill and expire in April 2009.

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The bill also would give those who do not itemize deductions on federal income tax returns a new standard deduction of $350 for individuals and $700 for joint filers for state and local property tax payments.

The Senate was expected to vote on Wednesday on its own tax-focused bill addressing the housing market crisis.

The House bill would authorize a $10 billion increase in tax-exempt revenue bonds to provide loans to first-time home buyers and finance low-income rental housing construction.

It would also ease restrictions on real estate investment trusts and make other technical changes on municipal bonds.

Over 20 percent of subprime adjustable-rate mortgage were seriously delinquent in the fourth quarter of 2007, according to the Mortgage Bankers Association.

The fourth-quarter MBA survey also found the percentage of prime mortgages seriously delinquent was 1.67 percent, the highest in the 10-year history of the data series.

Unlike the Senate bill, which is estimated to cost as much as $20 billion, the House bill includes ways to pay for the tax breaks. It would raise $8 billion by requiring brokers to report the cost basis of securities transactions, a step expected to boost capital gains tax compliance.

Another nearly $3 billion would come from delaying implementation of a new rule dealing with U.S. taxpayers' foreign tax credit limitations.

(Editing by Leslie Adler)