Senators agree to extend the $8,000 home-buyer tax credit

Senators agreed Wednesday to extend a popular tax credit for first-time home buyers and to offer a smaller credit to some repeat buyers.

The tax credit provides up to $8,000 to first-time home buyers but is set to expire at the end of November.

Senators agreed to extend the existing tax credit for first-time home buyers while offering a reduced credit of up to $6,500 to repeat buyers who have owned their current homes for at least five years, said Regan Lachapelle, a spokeswoman for Senate Majority Leader Harry Reid (D-Nev.).

The tax credits would be available to buyers who sign purchase agreements by the end of April. They would have until the end of June to close on their new homes, according to a summary of the legislation being circulated among lawmakers.

Senators were still negotiating the expansion of a separate tax credit that lets money-losing businesses get refunds for taxes paid in previous years, providing them with an immediate source of cash.

Senators in both major parties were hoping to add both tax provisions to a bill that would give people running out of unemployment insurance benefits up to 20 more weeks of federal aid. The Senate could vote on the overall bill as early as today, but lawmakers were still haggling over several unrelated amendments Wednesday evening.

Popular bills like the one to extend unemployment benefits often attract amendments that would have a difficult time passing on their own.

Republicans were demanding the opportunity to offer amendments to restrict federal aid to the community activist group ACORN and to require that people receiving unemployment benefits be processed through E-Verify, an Internet-based system that employers use to check on the immigration status of new hires.

The Senate’s majority Democrats have blocked the proposed amendments.

If the Senate passes the bill, it would go to the House, which passed a similar bill extending unemployment benefits last month. House leaders have said they support extending the tax credit for home buyers.

Lawmakers didn’t release a cost estimate for extending the tax credit, though similar proposals were projected to cost about $10 billion.

About 1.4 million home buyers have qualified for the existing credit through August. The National Assn. of Realtors estimates that 350,000 of them would not otherwise have bought their homes.

The government said Wednesday that new-home sales fell 3.6% last month. Some builders blamed the drop, the first since March, on uncertainty about the tax credit.

It takes 45 days to 60 days to close the deal on a house, making it unlikely that a sale made today would be consummated by the end of November.