Real estate tax update

On Jul 30, 2008, Pres Bush signed into law the Housing and Economic Recovery Act of 2008, P.L. 110-289 (the Act). The Act amends certain rules relating to real estate investment trusts (REITs) and provides other housing-related tax relief provisions. As background, in order to maintain its tax status, a REIT must meet certain income and asset tests. Under Code Section 1445, a transferee is required to deduct and withhold a tax equal to 10% on dispositions of US real property interests by a foreign person. Code Section 1445 provides several exemptions to this withholding requirement. The Act would provide first-time home buyers with assistance in making a down payment on a home by providing individuals with a refundable tax credit equal to 10% of the purchase price, up to $7,500. Under current law, there is a state-by-state limit on the annual amount of Federal low-income housing tax credits that maybe allocated by each state.