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Katrina Recovery Bill Provides $6.1 Billion in Tax Relief
Congress approved a $6.1 billion tax package last week to help individuals and businesses devastated by Hurricane Katrina, and President Bush was expected to sign the measure in short order.
Of interest to members of NAHB, the Katrina Emergency Tax Relief Act (H.R. 3768) allows individuals in disaster zones to use mortgage revenue bonds, which are typically issued by state and local governments, to finance low-interest rate mortgages or loans for repairing damaged homes.
As outlined by the House Ways and Means Committee, key provisions of the relief measure include:
- Tax relief for housing assistance to disclocated persons
- The availabilty of below-market mortgages in the disaster areas
- Extension of the Work
Opportunity
Tax Credit
- An employee retention tax credit
- Full deductibility of personal casualty losses
- A longer period of time to replace damaged property without incurring tax
- Extended deadlines for paying excise and employment taxes
- Modification of tax treatment when using a personal vehicle for charitable work
- Encouragement of cash donations by individuals and corporations
- A waiver of the 10% tax on early distributions from IRAs and pensions for individuals affected by the hurricane
- Assurance that families are not taxed on forgiven debt
Lawmakers are working on another package of hurricane-related tax breaks that will encourage businesses to rebuild in
New Orleans
and other storm-ravaged areas in
Louisiana
,
Mississippi
and
Alabama
.
In addition, President Bush has proposed creating a Gulf Opportunity Zone. Modeled after the “empowerment zones” that have been established across the country since the 1990s, the zones would provide businesses with special tax breaks through 2007 for rebuilding and expansion. Under the President’s plan, small businesses would be allowed to write off up to $200,000 in equipment investment costs and all businesses would receive a 50% bonus depreciation allowance.
The proposal would also make loans and loan guarantees available for small businesses and minority-owned businesses to get them up and running again.
Click here and enter the bill number in the box at the upper left for more details on H.R. 3768, or e-mail Jim Tobin at NAHB, or call him at 800-368-5242 x8258.
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