Omaha, NE – July 26, 2008 – (RealEstateRama) — Following months of concern about the troubled housing market, Nebraska’s Senator Ben Nelson applauded today’s passage of the Housing and Economic Recovery Act of 2008. The bill includes provisions championed by Senator Nelson providing property tax relief to Nebraskans and more investment in rural communities.
“Trouble in the housing market is a root cause of our weakening economy, and this bill addresses that issue,” said Senator Nelson. “I’m also very pleased that we were able to provide tax relief to the average homeowner by boosting the amount of property taxes they can deduct.”
The bill includes a provision pushed by Nelson and others to provide broad-based tax relief by expanding the opportunity to deduct property taxes from federal income tax. Previously, only taxpayers who itemize deductions were able to take advantage of the property tax deduction; however, nearly 250,000 Nebraska homeowners do not itemize their deductions. This new provision extends the property tax deduction to all homeowners by adding a standard deduction of up to $500 for a single filer or $1000 for joint filers on this year’s taxes, in addition to the standard deduction for non-itemizers. For example, a family with taxable income between $65,100 and $131,450 could deduct $1,000 of property taxes and pay up to $250 less in federal taxes. This change will benefit middle- and working-class homeowners and seniors – two groups hit hard by recent economic woes.
“The total number of Nebraska taxpayers who took property tax deductions in 2005 was less than half of the owner-occupied homes in Nebraska,” said Senator Nelson. “Congress has made the tax code fairer for middle class Nebraskans who own their homes but do not itemize. These are hard-working Nebraska homeowners who are the backbone of our nation and it’s about time they got a break on their property taxes.”
The housing bill includes another Nelson-cosponsored provision that will reduce the cost of borrowing for infrastructure and public works projects allowing Federal Home Loan Banks (FHLB) to guarantee tax-exempt bonds issued by local governments. This is important to local banks and communities in Nebraska as it will result in a lower cost of borrowing to facilitate public investment in communities. Under current law, state and local bonds backed by instruments of the federal government are generally not allowed to retain tax-exempt status with some exceptions. This bill adds FHLBanks to the list of exceptions.
“This will be of great benefit to Nebraska. Having this tool in place will allow for expanded economic development opportunities for rural communities in Nebraska,” said Matt Williams, President of Gothenburg State Bank. “From a banker’s standpoint, this is an added product we can use to invest in rural communities.”
“The health and vitality of our nation stands on the shoulders of the strength of our economy,” said Nelson. “This bill will strengthen the housing market, protect families struck by the foreclosure crisis, and stimulate the economy in Nebraska and across the nation.”