New Housing Bill Spells Relief for First-Time Home Buyers, Non-Itemizers

H&R Block Tax Pros Poised to Explain Tax Implications to
Homeowners
KANSAS CITY, Mo.--(Business Wire)--
President Bush signed into law Wednesday a weighty housing and
economic recovery bill designed to encourage homeownership, revamp the
housing finance industry and reduce foreclosures.

The Tax Institute at H&R Block reports that the legislation will
have a positive impact on taxpayers by making it easier to buy a first
home and deduct real property taxes even if homeowners do not itemize.

Refundable tax credit up to $7,500 available to first-time home
buyers

The law provides a one-time refundable tax credit of $7,500 or 10
percent of the home's purchase price, whichever is less, for
qualifying homes purchased April 9, 2008, through June 30, 2009.
Income limitations apply.

A credit reduces a tax payer's bill dollar-for-dollar. However, as
Jackie Perlman, a research analyst at The Tax Institute at H&R Block
notes, "This is a 'recapture credit,' which must be paid back over
time, so it essentially operates as an interest-free loan."

For example, a first-time home buyer who purchases a home on
October 1, 2008, for $100,000, will be able to claim a $7,500 tax
credit on their 2008 tax return but must repay $500 every year over 15
years starting in 2010.

Additional deductions on property taxes save tax dollars

Homeowners who take a standard deduction rather than itemize will
be able to claim an additional standard deduction for real property
taxes on their home. The maximum deduction is $500 ($1,000 if married
filing jointly) effective for the 2008 tax year.

"This deduction can reduce the tax liability for homeowners who
don't itemize," said Perlman. "For instance, a retired couple who have
lived in their home for 20 years may not have enough interest on their
mortgage or other deductions to justify itemizing. Now, they can still
benefit by deducting their real property taxes."

The housing bill also triggered changes in the low-income housing
credit for building or rehabilitating low-income homes and modifies
Section 121 - exclusion of capital gains on the sale of a principal
residence.

In addition, this legislation outlines new tax incentives for
areas affected by Hurricanes Katrina, Rita or Wilma. If a tax payer
took a casualty loss due to one of the 2005 hurricanes but later
received a grant as reimbursement, they are able to amend a previous
tax return to alter the year they have to claim the grant funds as
taxable income.

H&R Block tax offices are open year round to assist taxpayers in
understanding the new law and other tax changes that may affect them
and their families. Call 1-800-HRBLOCK to find a local year-round
office or log on to www.hrblock.com.

About H&R Block

H&R Block Inc. (NYSE: HRB) is the world's preeminent tax services
provider, having served more than 400 million clients since 1955 and
generating annual revenues of $4.4 billion in fiscal year 2008. H&R
Block provides income tax return preparation and related services and
products via a nationwide network of approximately 13,000
company-owned and franchised offices and through TaxCut(R) online and
software solutions. The company also provides business services
through RSM McGladrey and certain consumer financial services. For
more information visit our Online Press Center at www.hrblock.com.

H&R Block Inc.
Media Desk, 816-854-4287
mediadesk@hrblock.com

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