August 19, 2008

Housing Bill Offers Breaks for Taxpayers

The federal housing and foreclosure relief legislation just signed into law by President Bush contains a little-noticed—but potentially far-reaching—change in real-estate tax policy.

It permits millions of homeowners who don't itemize on their federal tax filings to claim a deduction for at least part of their local and state property taxes. Though the House version set the maximum write-off at $350 a year for single taxpayers and $700 for married joint filers, the Senate's $500 and $1,000 prevailed.

The new legislation effectively adds another tax preference for people who own houses while offering nothing to those who rent. The idea, say supporters, is to provide greater tax fairness for a huge category of owners — often seniors and lower-to moderate-income households — who opt for the standard deduction but pay local and state property taxes.

Critics say the plan is just another example of the government's inequitable approach to housing policy — overemphasizing the financial benefits of homeownership versus renting.

What do you think? Does this new legislation discriminate against those who cannot afford to own a home? Is this fair legislation? We'd love to hear your opinion. Use the comment link below to sound off on this topic.

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