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Senate Leaders agree on Homebuyer Tax Credit extention

Senate Democrats plan to extend an $8,000 tax credit for first-time homebuyers.

The plan would also let homeowners qualify for a $6,500 credit if they have lived in their property for five years. The full Senate will consider the measure as part of a bill to extend unemployment benefits.

The homebuyers’ credit would be available to individuals earning up to $125,000, or $250,000 for couples, up from $75,000 for individuals and $150,000 for couples under the current law.

The plan would extend the current credit, due to expire Nov. 30, to purchases under contract by April 30, 2010, allowing buyers another 60 days to close the sale.

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From Bloomberg.com

More than 1.2 million borrowers through Oct. 9 have claimed almost $8.5 billion of the $13.6 billion set aside for “first-time” homebuyer tax credits this year, according to U.S. Treasury data.

Realtors and mortgage bankers said the credits, which are available for taxpayers who haven’t owned a home in the past three years, have helped stabilize housing sales this year.

“Already we’ve seen the impact of this credit in jump- starting the housing sector,” Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, said on the Senate floor. He said it would be a “great mistake” to allow the break to lapse. Dodd estimated that more than 70 percent of current homebuyers would be eligible for the break.

Senator Reid Cites Support

Reid, a Nevada Democrat, said on the Senate floor today that there is significant support among both parties for the homebuyers’ tax credit. He said the other amendments sought by Republicans are unrelated to the unemployment bill and are designed to embarrass his colleagues.

Republicans want to vote on amendments on immigration and to bar funding for the community activist group ACORN.

Senate Minority Leader Mitch McConnell, a Kentucky Republican, agreed that most lawmakers support the unemployment and homebuyer measures. “We’re not that far away from an agreement,” he said earlier today.

The $2.4 billion unemployment measure would extend jobless benefits by 14 weeks in all states and provide another six weeks of benefits in states with the highest unemployment rates.

About 1.9 million Americans will exhaust their unemployment benefits by the end of this year unless Congress acts, the Labor Department said.