Tax Realty Consultant

The Senate could pass a housing stimulus bill next week, and home builders may benefit the most from the legislation, according to one research group.

Companies will be able to apply net operating losses from 2008 and 2009 against profits from the prior four years, Stanford Group Co. said in a policy research note on Thursday.

“This is very helpful to home builders as well as some broker-dealers who have suffered or are likely to incur losses that exceed their prior two years’ worth of profits,” the group said. “The other provisions offer modest assistance to the housing market, but none are a panacea.” Read the report.

One provision of the bill gives a $7,000 tax break — spread over two years — to people who buy a foreclosed home. The bill would also provide $4 billion in grants for states to purchase foreclosed homes and mitigate blight.

FHA reform provisions in the bill would raise the FHA loan limit, and also raise the down-payment requirement for these loans to 3.5%. And a $10 billion increase in tax-free, state-issued bonds would be used to help troubled homeowners refinance, according to the report.

Read more about the Senate bill as well as the case for bankruptcy reform to help homeowners stay in their homes on this week’s Real Estate page. Also, read a Realty Q&A that answers one family’s question of whether to rent out their mother’s home, now that she has moved to a retirement community.

After the Senate approves the housing bill, it moves to the House, which will likely add amendments. Still, enactment of the bill could be quick: Stanford Group believes there’s at least a 75% chance that the housing bill will get enacted, and it could come by the Memorial Day recess.

Realty Tax Consultant

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