This act was passed in July 2008 and overhauls the government regulation of the mortgage industry and lenders. Included in this bill is more than $15 billion in incentives. Three provisions that are especially important are:

The First-time Homebuyer Tax Credit

This credit is actually a loan that must be repaid in equal installments over 15 years. The amount of the credit is the lesser of $7,500 or 10% of the purchase price of the home and is subject to income phaseouts. To qualify you may not have owned a home during the past three years and purchased a principal residence between April 8, 2008 and July 1, 2009. The credit is reduced to $3,750 if married and filing a separate return. Two or more individuals and those in civil unions can qualify for this credit however the IRS has not yet issued guidance as to the allocation of the credit.

Additional Standard Deduction for State and Local Property Taxes

Those who do not itemize on their federal returns may claim this additional deduction for real property taxes up to $500 for individuals and $1,000 for joint filers and cannot exceed the deduction that would have been taken if the taxpayer itemized. This additional deduction applies only to 2008.

Revised Home Sale Gain Exclusion

If you use your home for rental or as a vacation home part of the year, you will no longer be able to exclude gains that can be allocated to nonqualified use and applies to sales and exchanges that are completed after December 31, 2008. This was done to prevent the conversion of a vacation or rental home being converted to a principle residence after the end of 2008 and then using the full home sale exclusion.

Additional Incentives provided by the Housing Act:

• The low-income housing tax credit has been simplified and increased.
• The rules for tax-exempt housing bonds have been simplified.
• The mortgage revenue bond program has been temporarily expanded to allow existing subprime loans to be refinanced.
• A number of reforms affecting Real Estate Investment Trusts have been enacted.
• The rehabilitation tax credit has been improved.
• Seller-funded down payment assistance programs (DAPs) have been banned.
• This act also provides preforeclosure counseling for distressed homeowners and authorizes loans to Fannie Mae and Fredde Mac by the U.S. Treasury
• Authorized corporations to claim a limited amount of AMT and research credits that have not been used instead of taking bonus depreciation under the Economic Stimulus Act.