Provision Would Allow Millions of American Homeowners Who Do Not Itemize on to Take Additional Standard Deduction

Washington, D.C. – May 8, 2008 – The U.S. House of Representatives today passed a package of measures to address and stabilize the current housing crisis, and the package includes an initiative that Rep. Rush Holt (NJ-12) championed to create a new property tax deduction for American homeowners who are suffering from high property tax bills. The Holt provision would allow homeowners who currently do not itemize on their Federal tax returns to take an additional standard deduction for the state and local property taxes that they pay. The bill would create an additional standard deduction of $350 for single filers and $700 for joint filers for state and local property taxes paid or accrued.

“Homeowners in New Jersey on average pay the highest property taxes in the country while facing declining home values,” Holt said. “This initiative would help families in New Jersey and all across the country who are excluded from being able to deduct their property and provide them with some relief during this economic downturn.”

In 2005, there were 72.3 million owner-occupied households in the United States, but only 40.5 million taxpayers claimed an itemized deduction for real estate property taxes. The more than 30 million homeowners who don’t currently benefit from property tax deductions include elderly homeowners who no longer itemize in order to receive a mortgage interest deduction, but are still subject to high property taxes.

The standard federal tax deduction is adjusted each year for inflation, but that adjustment does not take into account the rising property tax values and increases. Based on Census data, the total amount of state and local property taxes paid in the United States increased by 50 percent from 2000 to 2006.  Over the same period of time, inflation increased by only 17 percent. Over that time, median household income actually dropped by 2 percent.

Holt supported the broader comprehensive package that included the property tax relief provision. The legislation would help families facing foreclosure keep their homes and help other families avoid foreclosures in the future.