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Gulf Coast Provisions Caught in War Funding Veto
President Bush last week vetoed a $124.2 billion supplemental appropriations bill to fund the military and the war in Iraq. Before the bill was even approved, Bush vowed to veto the legislation because it contained language specifying a timetable for withdrawal of U.S. military forces from Iraq.
The bill also included $4.8 billion in small business tax provisions meant to offset the impacts of an increase in the federal minimum wage. Of special importance to home builders, the measure would increase the amount of investment that may be immediately and fully deducted by small businesses from $100,00 to $125,000.
Also, tax-writers included key provisions for the repair and reconstruction of affordable housing in the GO Zone, Gulf Coast areas that were hit particularly hard by Hurricanes Katrina, Wilma and Rita. Specifically, the legislation does the following:
- Extends until Dec. 31, 2010 the placed-in-service deadlines for properties that received an allocation of Low Income Housing Tax Credits (housing credits) within the GO Zone.
- Extends the difficult-to-develop-area designations in this same area until Dec. 31, 2010.
- Allows properties in this area that are placed-in-service by Dec. 31, 2010 to use 9% housing credits with “disaster relief” Community Development Block Grant funds loaned at below-market rates.
- Treats certain qualified GO Zone repairs or reconstruction as “qualified rehabilitation” for purposes of the mortgage revenue bond and GO Zone bond rules.
- Requires the Government Accountability Office to study the practices employed by state and local governments in allocating and utilizing tax incentives provided as part of the GO Zone Act of 2005 and to report to Congress on its findings within one year of enactment.
Congressional leaders in the House and Senate are now in negotiations with the President over a new supplemental appropriations bill that he would be willing to sign.
House Ways and Means Committee Chairman Charlie Rangel (D-N.Y.) stated last week that the tax provisions from the first supplemental would be included in the next version. If this does not occur, tax-writers are committed to moving a small-business tax bill separately.
For more information, e-mail Greg Brown at NAHB or call him at 800-368-5242 x8421.
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