Senate Approves Extended U.S. Homebuyer Tax Credit
By Brian Faler

Nov. 4 (Bloomberg) -- The U.S. Senate approved a $45 billion plan to expand a tax credit for first-time homebuyers, extend jobless benefits and provide tax refunds to money-losing companies.

Lawmakers voted 98-0 for the measure, sending it to the House, where Majority Leader Steny Hoyer of Maryland said in a statement it will receive a vote as early as tomorrow. The bill then would be forwarded to President Barack Obama for his signature.

The plan would be the first major extension of provisions in February’s economic stimulus plan. The $8,000 homebuyers’ tax credit, slated to expire this month, would continue until April 30 and be expanded to include people with higher incomes and some who already own homes. That would cost about $10 billion in the fiscal year that began Oct. 1, according to Congress’s Joint Committee on Taxation.

The measure includes $2.4 billion to extend unemployment benefits for as many as 20 weeks, enough to aid the jobless through the holiday season. It would loosen tax rules for homebuilders and other money-losing companies to let them claim an estimated $33 billion in tax refunds this year, according to Joint Committee on Taxation estimates.

The legislation had been delayed for weeks by Republican demands for votes on amendments to the plan.

“Republicans used every trick in the book to slow and stall and ensure we can’t do important work,” Senate Majority Leader Harry Reid, a Nevada Democrat, said today.

Senate Minority Leader Mitch McConnell, a Kentucky Republican, has said the legislation could have been approved last week if Democrats had agreed to his colleagues’ demands. Republicans sought a vote on an amendment to end the Treasury Department’s Troubled Asset Relief Program.

Other Stimulus Measures

Lawmakers are still considering whether to extend several other elements of the stimulus package, including subsidies to help the jobless buy health insurance and increased funds for food stamps. Obama has called for sending seniors $250 checks because they won’t get a cost-of-living increase next year in their Social Security checks.

Michael Mundaca, nominated to be assistant secretary for tax policy at the U.S. Treasury Department, said the administration may seek to extend the interest-subsidized Build America Bonds created as part of the stimulus package. Mundaca told the Finance Committee today the initiative is “too successful to allow to go away.”

The Treasury Department estimates that more than 1.4 million Americans have taken advantage of the homebuyer credit at a cost so far of about $10 billion.

Increased Credit

The Senate plan would allow homebuyers who have lived in their residence at least five years to receive a $6,500 credit. Couples earning as much as $225,000 a year and individuals earning up to $125,000 would qualify. That is up from the current $75,000 limit for individuals and $150,000 for couples.

Those buying homes worth more than $800,000 wouldn’t be eligible for the credit. Those who sell their new home or stop using it as their main residence within three years would have to repay the credit.

The credit “really does provide some economic lift in the country at a time when we desperately need economic lift,” said Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat.

He said expanding the credit to those who already own homes would help create jobs because “the move-up buyer is more inclined and capable of buying that furniture, maybe building a porch, putting a garage on, a new roof” and making the “kinds of investments I think is going to be a job-creator across the country.”