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Senate Nears Deal on Keeping Tax Credit for Home Buyers

Thursday, October 29, 2009 - Article by: - Message

Senate Nears Deal on Keeping Tax Credit for Home Buyers


The Senate's top Democrat and top Republican each voiced support on Wednesday for extension of a soon-to-expire $8,000 tax credit for home buyers, but left unclear when the chamber would act.


"There has been general agreement by a significant number of senators, Democrats and Republicans, to get this done," Senate Majority Leader Harry Reid, a Democrat, said on the Senate floor.


The chamber's top Republican, Senator Mitch McConnell, also said most senators support the measure. "I certainly share his view," McConnell said.


The tax credit for first-time home buyers, which has helped lift the housing market out of its worst slump since the Great Depression, is set to expire on Nov. 30 and senators have been negotiating over how best to extend it.



Under an agreement reached by key senators, the tax credit would be extended through the end of April and be expanded to cover repeat buyers who have been in their homes at least five years, sources familiar with the plan said.


First-time buyers would continue to get an $8,000 credit, while repeat buyers of primary residences would be eligible for a credit of $6,500, the sources said.


They said the credit would be available for individuals making up to $125,000 a year and couples earning up to $225,000 per year.


Timing of a Vote Uncertain


While extending the credit enjoys widespread support, its fate is caught up in a spat between Reid and McConnell over unrelated issues.



Reid had wanted to attach a bill to extend the homebuyer credit as an amendment to legislation to lengthen insurance benefits for unemployed workers. The Senate voted to take up the insurance benefit bill on Tuesday, but did not attach the homebuyer tax credit to the measure.


Despite that apparent roadblock, Senate Finance Committee Chairman Max Baucus, who has been involved in negotiations over the tax credit, told Reuters late on Tuesday that he expected the Senate would vote on the bill sometime this week.


"There are various paths and whichever works first is the one that is going to be" followed, he said, referring to the possibility that the Senate could vote on the bill independently or as part of separate legislation.



A spokeswoman for Reid said the unemployment insurance measure could get pushed to next week as lawmakers try to resolve differences over unrelated issues, which would delay consideration of the homebuyer credit extension.


"We will get this extension passed," she said.


A report last week showed sales of previously owned homes hit a two-year high in September as buyers rushed to take advantage of the credit before its expiration date. However, a report on Wednesday showed new home sales, a much smaller segment of the market, tumbled unexpectedly last month.


Separately, a report from the Mortgage Bankers Association on Wednesday that demand for mortgages has fallen for the past three weeks as buyers move to the sidelines.


A buyer would have to close on the purchase of a home before Nov. 30 to take advantage of the current tax credit.


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