 |
||||
 |
||||
 |
||||
 |
||||
 |
||||
 |
||||
 |
||||
 |
||||
 |
||||
 |
||||
 |
||||
 |
 |
|
 |
|
 |
|
|
On July 30, 2008, President Bush signed P.L. 110-289, the Housing Assistance Tax Act of 2008. The new law has a number of tax-related provisions covering areas such as low-income housing tax credits, a new real estate tax deduction for non-itemizers, excludible gains on the sale of a personal residence, a new tax credit for some firsttime homebuyers, new reporting requirements for credit card sales, new investment options for REITS, and a number of other provisions. Here are some highlights: New limit on the exclusion for gain on sale of a primary residence. If you take a previously owned home and convert it to your primary residence on or after January 1, 2009 and later sell that home, there are new limits on how much gain you can exclude from tax when you sell. The $250,000 gain exclusion on sale of a primary residence ($500,000 exclusion on joint returns) can apply to a home that you may have rented out for some time or that you may have used for some other purpose. Technically, you only have to have owned and occupied a home as a primary residence for two years out of five before it’s sold. An existing rule denies the exclusion to the extent you have taken depreciation on your home. You may have been entitled to depreciation either because the house was rented out for some period or because you used a portion of it as a home office. A new rule now further denies the exclusion for any gain that accrues after 2008 and before you begin using a home as your primary residence. It is assumed that gain accrues evenly over your entire ownership period. More flexibility to lease space in a rehabilitated nonresidential building to taxexempt tenants without jeopardizing eligibility for the rehab credit. As much as 50% of the space in a nonresidential building undergoing rehabilitation may now be leased to a tax-exempt tenant without forfeiting eligibility for the rehab credit. Previously the limit was 35% of the space. This change is retroactive; it covers post-2007 rehab expenditures. New option for corporations to swap otherwise allowable bonus depreciation for immediately refundable AMT and rehab credits. Some corporate taxpayers may have rehab credits that they can’t currently use. The new law allows some corporations now to treat a limited amount of these credits as refundable credits that can generate an immediate tax benefit. To qualify, corporations have to give up their rights to claim 50% bonus depreciation and/or accelerated depreciation on certain types of property, such as property with a MACRS life of 20 years or less, qualified leasehold improvements, water utility property, or certain types of computer software placed in service after March 31, 2008. This tradeoff is available for corporate tax years that end after March 31, 2008. Various changes to low-income housing provisions and the low-income housing tax credit (LIHTC):
New real estate tax deduction for nonitemizers. Taxpayers who don’t have enough deductions to itemize will be allowed a deduction for up to $500 worth of real estate taxes in addition to their regular standard deduction (up to $1,000 worth for joint return filers). This special deduction is only available for 2008 and applies only for regular tax purposes. The deduction is disallowed for purposes of the alternative minimum tax. New “first-time homebuyers” tax credit. In effect, the federal government is going to make down payment loans of up to $7,500 for low-to-moderate income taxpayers who buy a primary residence for the first time. The loan is made in the form of a “credit” that a first-time homebuyer can claim for the year of the purchase and then pay back (i.e., “recapture”) over the next 15 years. This credit is fully available only to joint return filers with gross income of approximately $150,000 or less or to individual filers with gross income of approximately $75,000 or less. The actual threshold for claiming the full credit is based on a modified income calculation known as modified adjusted gross income or MAGI. The credit is allowed for purchases on or after April 9, 2008 through June 30, 2009. If you buy a first-time home during the first half of 2009, you can elect to treat it as having been bought in 2008 and can claim the credit on your 2008 tax return. New investment options for REITs. The new law contains various provisions that will make it easier for REITs to make overseas investments and to invest in certain types of health care facilities. New Tax-Exempt Bond Provisions. The new law (1) authorizes the issuance of up to $11 billion worth of tax-exempt bonds that can be used to raise money for refinancing subprime mortgages; (2) allows the issuance of tax-exempt bonds that are guaranteed by a Federal Home Loan Bank, and (3) extends through the end of 2010 certain provisions relating to disaster-area mortgage bonds. These provisions were set to expire at the end of 2008. Other miscellaneous changes. A new procedure is established for avoiding withholding on real estate sales by having the seller certify his nonforeign status through an intermediary. Please contact your Anchin relationship partner to discuss how these provisions may apply to you.
|
|
|
| Copyright© 2004 Anchin. All Rights Reserved. Site by Chrein.com |