The Senate has overwhelmingly passed a housing relief bill that includes a $7,000 tax credit for purchasers of foreclosed homes in addition to $4 billion in grants for local communities to buy and repair foreclosed properties.

The bill, passed by a vote of 84-12, provides $150 billion for pre-foreclosure counseling and $10.9 billion in tax-free mortgage revenue bonds to help local housing agencies refinance subprime loans. A temporary tax deduction would allow families to deduct up to $1,000 in property taxes if they do not already itemize on their returns.

Before the bill was passed, the Senate also added $6 billion in tax break extensions for renewable energy producers. The production tax credit offers an incentive of $0.02 per kilowatt-hour for facilities that produce energy from sources such as solar, wind, biomass, geothermal and hydropower.

The bill also offers $25 billion in tax breaks over three years to homebuilders and other money-losing businesses. Companies would be able to apply the tax breaks as far back as their 2004 returns and receive a refund, even if they lost money in 2008 or 2009. This measure faces an uncertain future in the House.

House leaders hope to pair the Senate bill with a measure advanced by Rep. Barney Frank, D-Mass., who wants the Federal Housing Administration to insure up to $300 billion in refinanced mortgages.

The House Ways and Means Committee has also passed the Housing Assistance Tax Act of 2008, by a vote of 35-5. It would provide tax credits of up to $7,500 to first-time homebuyers. The bill offers an additional standard deduction in 2008 for state and local real property taxes up to a maximum of $350 for individuals or $700 for joint filers.

A temporary increase in the low-income housing credit would boost the limitation in 2008 and 2009 by an additional $0.20 per person from the current limit of $2. The bill also contains provisions to simplify the technical rules for tax-exempt housing bonds, provide a temporary increase for mortgage revenue bonds, and eliminate the costs imposed on housing programs by the alternative minimum tax.

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