NEW YORK—The U.S. Senate passed a housing bill with tax relief measures for Gulf Coast residents in a rare Saturday session. The bill, which passed by a 72-13 vote, now goes to President George W. Bush’s desk for his signature. It is expected to be signed quickly.
Once law, it will provide Gulf Coast homeowners and businesses with $1.3 billion in tax relief recovering from Hurricanes Rita and Katrina in 2005. The tax relief provisions were added by Sen. Mary Landrieu (D-La.).
“It was our intention that those grants be tax-free, but as it turned out, they were not,” Landrieu told WWL First News, a radio station in New Orleans. “So, it took us 18 months to fix it, and what it will mean is between about $5,000 to $30,000 depending on people’s tax bracket in tax relief.”
The Road Home Tax assistance will include homeowners who took on a casualty loss deduction on their 2005 federal tax returns. The loss was calculated to account for damage to their homes following Hurricanes Katrina and Rita, when the Internal Revenue Service (IRS) required homeowners to pay income tax on their rebuilding grants.
“Gulf Coast homeowners…were hit with a tremendous tax burden while struggling to recover from hurricanes Katrina and Rita,” Landrieu said in a press release last month when the bill was initially voted on. “Many of our homeowners faced tax bills this spring on their Road Home grants, which was never intended. But this bill will relieve them of $1 billion that the federal government overtaxed them.”
The bill also includes a provision that removes a rebuilding deadline for regional businesses. The deadline applied to new ventures in hurricane-affected areas that would benefit from the Gulf Opportunity Zone (GO Zone) bonus depreciation tax benefits. The current law only allows tax relief for rebuilding projects that were initiated before December 31, 2007.
According to Sen. Landrieu, the intention of the package is to help relieve the region’s housing crisis and broaden the Federal Housing Administration’s programs to back refinanced loans.
The bill was passed by the U.S. House of Representatives on July 23.
