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Senate Extending Homebuyer Tax Credit?

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Senate Extending Homebuyer Tax Credit?

Postby GreenRealty » Mon Oct 26, 2009 4:41 pm

Senate seen extending homebuyer tax credit soon

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By Steve Holland and Corbett B. Daly

WASHINGTON (Reuters) - The U.S. Senate is expected to act later this week to extend a popular tax credit for first-time homebuyers that is scheduled to expire at the end of next month, Sen. Bill Nelson said on Monday.

"We should be able to extend that later this week," Nelson, a Democratic member of the Senate Finance Committee, told reporters before joining President Barack Obama on an Air Force One flight to Florida.

A number of proposals to extend the $8,000 tax credit are being considered in the Senate.

Senate Majority Leader Harry Reid floated a proposal last Friday to extend the first-time homebuyer tax credit through December 31, 2010.

Under Reid's plan, the $8,000 tax credit would be phased out over time, dropping to $6,000 in April, $4,000 in July, and $2,000 in October, before expiring at the end of 2010.

Reid's offer is a counterproposal to Sen. Johnny Isakson, a Georgia Republican, who wants to extend the $8,000 tax credit through June and expand it to all buyers of homes that will be a primary residence.

Isakson, a former real estate agent, would also raise the income limit of eligible homebuyers to $300,000 per family from the current $150,000 limit.

Reid is in the midst of negotiations with Senate Republicans over a pending proposal to extend insurance benefits for the jobless, and a procedural vote on unemployment insurance is expected Tuesday.

If lawmakers can hash out a deal, the housing credit would be attached to the unemployment insurance measure, a Democratic aide told Reuters.

The U.S. real estate and homebuilding industry is lobbying Congress to extend the tax credit although critics say it gives cash to many buyers who would have purchased a home without the benefit.

The White House has also raised concerns about the cost of expanding the credit.

Lawrence Summers, Obama's top economic adviser, told Reuters last week that the administration would be open to extending the existing credit, but wants to see it remain focused on first-time buyers.

The tax credit was approved in February 2008 and about 1.5 million tax returns filed with the Internal Revenue Service have claimed the credit at a cost to the government of $10 billion, according to officials.

© Thomson Reuters 2009 All rights reserved

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