'Katrina II' Tax Bill Introduced in the House to Spur Environmental Cleanup, Redevelopment

House Ways and Means Committee members Jim McCrery (R) and Bill Jefferson (D), both from Louisiana, have introduced legislation (H.R. 4155)to promote cleanup and redevelopment in hurricane-ravaged areas of the Gulf Coast. The measure is a follow-up to the Katrina tax bill enacted in September, which focused primarily on individual tax relief and immediate assistance for hurricane victims. The "Katrina II" bill offered by McCrery and Jefferson includes numerous provisions affecting income-producing real estate. 

Specifically, these provisions would:

• Authorize additional tax exempt bonding authority for the acquisition, construction and renovation of nonresidential real property

• Provide 50 percent bonus depreciation for all equipment as well as leasehold improvements and nonresidential and rental residential property purchased on or after Aug. 28 and placed into service by Dec. 31, 2008

• Extend brownfield cleanup cost expensing for two years and expand the program to include petroleum contamination

• Allow 50 percent of cleanup and demolition costs to be expensed immediately

• Increase the qualified rehabilitation and historic rehabilitation tax credit amounts

• Relax current low-income housing requirements and increase the credit allocation

• Double the small business expensing amount from $100,000 to 200,000 and increase the phase-out limit for qualifying purchases from $400,000 to $1 million.

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