Real Estate Insight

Economic Stimulus Package Act of 2008

The Economic Stimulus Package Act of 2008

This is a new act designed to boost the U.S. economy by providing tax rebates to individuals and tax incentives for businesses and was just passed on February 13, 2008.

Check with your CPA or tax person regarding details on this new Act.

Recovery rebates:

To stimulate the economy eligible individuals will begin receiving rebate checks after the April 15^th tax deadline.

The amount of the rebate will be either $600 ($1,200 if filing jointly) or your 2007 income tax liability after credits, whichever is less. This will apply as long as the taxpayer has either:

- Tax liability of at least $1 and gross income greater than the standard deduction plus one personal exemption (2 if filing jointly) or

- At least $3,000 of qualifying gross income (earned income, Social Security and certain veterans’ benefits).

The rebate for taxpayers with dependent children will also be increased by $300 per qualifying child. Child must not have reached the age of 17 before the end of 2007 and must have a Social Security number.

Business investment incentives:

The package also creates incentives for business investment by increasing the Section 179 limit for initial year expensing to $250,000 (from $128,000). The Section 179 expensing election allows a current deduction for newly acquired assets, which would have to be depreciated over a number of years. The new higher limit applies for calendar year 2008 or a business’s fiscal year that begins in 2008.

There is also a provision which offers a special allowance for certain property. This is in addition to any such property that qualifies for Section 179 expensing. For eligible property the special depreciation amount is equal to 50% of its adjusted basis. The following types of property qualify for this special depreciation:

- Tangible property with a recovery period of 20 years or less,

- Computer software purchased by the business,

- Water utility property, and

- Qualified leasehold improvement property.

Temporary loan limit increases:

The act increases the dollar loan limit from $417,000 to $729,750. The increase is to reduce predatory lending practices on borrowers seeking loans in excess of the current limits. The increases are in effect for loans made or approved for origination through the end of 2008.

Check with your CPA or tax person to learn more about this new act.