Key Provisions of the American Recovery and Reinvestment Act

Overview of President's Plan for HomeOwners

February 20, 2009
Author: Doug Kennel (doug@smiloan.com)

Tax Provisions

• $8,000 first-time home buyer, true tax credit (no repayment) for the purchase of a principle residence between January 1 and December 1, 2009. Recaptured if home is sold within three years. Removes the restriction on the use of tax credit proceeds with Housing Finance Agency-issued tax exempt mortgage revenue bonds.
• Short-term gap financing for Low Income Housing Tax Credit (LIHTC) projects:
1. Provision allowing states to turn in portion of 2009 LIHTC allocations for cash.
2. Special appropriation of $2 billion in HOME funds.
• Up to a ten-year deferral of tax from business debt cancelled as part of a repurchase or restructuring.
• 5-year carry-back of 2008 net operating losses for businesses with gross receipts of less than $15 million (three year average).
• Extension of enhanced bonus depreciation.
• Extension of increased small business expensing.
• Enhancements to the section 25C program for energy efficiency remodeling improvements to existing homes.
• One-year patch of the Alternative Minimum Tax.
• Increase New Markets Tax Credit allocating authority for 2008 and 2009.
• Delays for one year the start of 3% government contractor withholding requirement.

Appropriations Provisions

• $2 billion for full year payments to owners of Section 8 project based rental assistance properties.
• $2.25 billion through HOME program and Low Income Housing Tax Credit program to fill financing gaps.
• $1 billion for CDBG.
• $2 billion for Neighborhood stabilization program.
• $1.5 billion for homelessness prevention activities (help with rents, etc).
• $250 million for energy retrofitting and green investments in HUD assisted projects.
• $1 billion for Section 502 direct loans under the Rural Housing Service.
• $10.4 billion for Section 502 guaranteed loans under the Rural Housing Service.
• $27.5 billion for highway spending.

Other Key Provision

• Increases in FHA, Fannie Mae and Freddie Mac loan limits to 2008 levels.