House committee backs tax bill on housing crisis

WASHINGTON (Reuters) - The House of Representatives Ways and Means Committee approved on Wednesday a bill proposing a range of tax breaks meant to tackle the nation's housing market crisis.

With home prices down and foreclosures soaring, the committee proposed giving first-time home buyers, within income limits, a refundable tax credit of up to $7,500 that would have to be repaid to the government over 15 years.

The temporary tax credit would become available upon enactment of the bill and expire in April 2009.

The bill also would give those who do not itemize deductions on federal income tax returns a new standard deduction of $350 for individuals and $700 for joint filers for state and local property tax payments.

The Senate was expected to vote on Wednesday on its own tax-focused bill addressing the housing market crisis.

The House bill would authorize a $10 billion increase in tax-exempt revenue bonds to provide loans to first-time home buyers and finance low-income rental housing construction.

It would also ease restrictions on real estate investment trusts and make other technical changes on municipal bonds.

Over 20 percent of subprime adjustable-rate mortgage were seriously delinquent in the fourth quarter of 2007, according to the Mortgage Bankers Association.

The fourth-quarter MBA survey also found the percentage of prime mortgages seriously delinquent was 1.67 percent, the highest in the 10-year history of the data series.

Unlike the Senate bill, which is estimated to cost as much as $20 billion, the House bill includes ways to pay for the tax breaks. It would raise $8 billion by requiring brokers to report the cost basis of securities transactions, a step expected to boost capital gains tax compliance.

Another nearly $3 billion would come from delaying implementation of a new rule dealing with U.S. taxpayers' foreign tax credit limitations.

(Editing by Leslie Adler)