HOME BUYER TAX CREDIT BEING EXTENDED TO NEXT APRIL AND EXPANDED TO INCLUDE EXISTING HOMEOWNERS WHO BUY NEW HOMES.- UNEMPLOYMENT BENEFITS ALSO EXTENDED

Homebuyer Tax Credit May Be Approved Early Next Week, Reid Says


Oct. 30 (Bloomberg) -- Congress could approve extensions of an $8,000 first-time homebuyers’ tax credit and unemployment benefits as soon as Nov. 3, Senate Majority Leader Harry Reid said.

Reid, a Nevada Democrat, said today he has scheduled a vote late on Nov. 2 to bring debate on the issues to a close and clear the way for approval by the Senate, followed by the House.

“The House said that they would accept that and that could be done as early as” Nov. 3, Reid said on the Senate floor. That “would be a great relief,” he said.

The legislation has been delayed by Republican demands for votes on several amendments, including one to ensure the end the Treasury Department’s Troubled Asset Relief Program by the end of the year. The Nov. 2 procedural move, if approved, would enable Democrats to ignore those demands and put the measure to a vote.

Democrats announced plans earlier this week to extend the homebuyers’ tax credit, scheduled to expire at the end of November, until April 30. The plan also would let more people qualify for the break, including some who already own homes and those with higher incomes.

Homebuyers who have lived in their prior residences for at least five years could receive a credit of $6,500 under the plan. Couples earning as much as much as $225,000 and individuals earning up to $125,000 would also qualify. That’s up from the current $75,000 limit for individuals and $150,000 for couples.

‘Shore Up the Economy’

“The success of the American economy is closely tied to the success of the housing market; by helping to stabilize the housing market, the homebuyer tax credit has helped to shore up the economy as it begins to recover,” Senate Finance Committee Chairman Max Baucus, a Montana Democrat, said yesterday. “This would enable an even greater number of potential homebuyers to take the credit.”

Lawmakers said they want to prevent home sales from slipping as the economy struggles to recover from the worst drop in home prices since the Great Depression.

More than 1.2 million borrowers have claimed $8.5 billion of the $13.6 billion set aside for the homebuyer tax credits this year, according to the Treasury Department. The Obama administration has endorsed the extension.

“I think the first-time home-buyer credit is a great example of funding that’s helped to stabilize the housing market and should be extended,” Jared Bernstein, chief economist to Vice President Joe Biden, said on Bloomberg television today. Treasury Secretary Timothy Geithner gave his support yesterday.

Three Years

The measure would require those receiving the tax break to remain in their new home for three years. They would have to repay the credit if they didn’t. Those buying homes worth more than $800,000 wouldn’t be eligible for the credit. Lawmakers also said they won’t extend the break beyond April 30.

“The American people should understand this - and the affected industries - this is the last extension,” Senator Johnny Isakson, a Georgia Republican who cosponsored the plan, said at a news conference yesterday. “Tax credits like this only work by creating the sense of urgency to take advantage of them.”

The Joint Committee on Taxation estimated the revised homebuyer tax credit would cost $10.8 billion over 10 years. Those costs would be offset by provisions delaying a tax break for multinational companies scheduled to take effect next year so the bill wouldn’t add to the government’s budget deficit.

Unemployment Benefits

The plan also calls for spending $2.4 billion to extend unemployment benefits by 14 weeks in all states, and by six additional weeks in states with the highest jobless rates. Those costs would be offset by extending an employer payroll surtax that is slated to expire this year. Senate Minority Leader Mitch McConnell yesterday dropped his demand for votes on amendments related to immigration and the community activist group ACORN.

McConnell, a Kentucky Republican, continued to insist on a vote on the TARP-related amendment. The proposal would remove Geithner’s ability to unilaterally extend the financial bailout program beyond its Dec. 31 expiration date to October 2010.

[link to www.bloomberg.com]

Last Edited by PACNWguy1 on 10/30/2009 04:16 PM