BREAKING NEWS: First Time Home Buyer Tax Credit nears extension!
Senate Democrats plan to extend an $8,000 tax credit for first-time homebuyers and allow benefits for some people who already own residences, a spokeswoman for Majority Leader Harry Reid said.
The proposal would let homeowners qualify for a $6,500 credit if they have lived in their residence for five years, said Reid aide Regan Lachapelle. Lawmakers expect to consider the measure as part of a bill to extend unemployment benefits, she said. That measure has been held up by a disagreement with Republicans over other proposed amendments.
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, Lachapelle said.
Lawmakers want to keep home sales from slipping as the economy struggles to recover from the worst drop in home prices since the Great Depression.
“The compromise we have now would expand the credit beyond first-time homebuyers,” Lachapelle said.
The plan would extend the credit, due to expire Nov. 30, to home purchases under contract by April 30, 2010, with borrowers allowed another 60 days to close the sale, according to a person familiar with the details of the agreement.
Operating Losses
The amendment is being packaged with a separate proposal to extend and expand a tax break for companies with net operating losses.
Any legislation would have to be reconciled with a House unemployment measure approved last month that omits the homebuyer tax provisions and extends jobless benefits only in states with the highest unemployment rates.
House Speaker Nancy Pelosi, a California Democrat, is waiting to see the final Senate agreement before deciding whether to support it, said spokesman Nadeam Elshami.
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.
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.
To contact the reporters on this story: Dawn Kopecki in Washington at dkopecki@bloomberg.com; Brian Faler in Washington at bfaler@bloomberg.net
Source: Bloomberg News, Dawn Kopecki and Ryan Donmoyer (10/28/2009)
