Senate Approves Tax Credit Extension, On To The House

The U.S. Senate voted Wednesday to extend and expand the popular first-time homebuyer tax credit. The measure cleared the chamber with a vote of 98 to 0.

It now goes to the House of Representatives for approval. According to a statement from House Majority Leader Steny H. Hoyer (D-Maryland), it will be brought “to the House floor for a vote as early as tomorrow [Thursday].”

The bill is widely expected to pass the House as well, and then needs only President Obama’s signature.

The $8,000 tax break for first-time buyers, which was set to expire at the end of this month, would continue until April 30, by which buyers would have to have signed a contractual purchase agreement, but not closed on the sale. Another 60-day cushion beyond the end of April would be allowed to complete the closing.

The measure removes the first-time-only stipulation, though, opening the benefit up to existing homeowners who’ve lived in their current residence for at least five years but want to relocate to a new primary residence. The incentive amount for those buyers is $6,500.

The income limits for both first-time buyers and existing homeowners would be $125,000 for individuals and $225,000 for couples – up significantly from the current first-time buyer thresholds of $75,000 per individual and $150,000 per couple.

The tax break would only be offered on homes priced at $800,000 or less, and beneficiaries who sell the home or stop using it as their primary residence within three years would be required to repay the credit.

The housing tax credit expansion was appended to a larger bill that also included an extension of unemployment insurance benefits and provisions that allow companies to apply net operating losses to previous years’ numbers in order to reduce their business tax.

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