U.S. Homebuyer Tax Credit Extended

It was announced yesterday that the Senate approved a $45 billion plan to expand the tax credit for first-time homebuyers while also extending jobless benefits and providing tax refunds to companies that are losing money. Senators in Washington voted 98-0 for the measure and now it has to pass through the House to become a law. Majority leader Steny Hoyer (Maryland) said in a statement that the bill could receive a vote as early as today. If it passes in the house, it will be forwarded to President Barack Obama for his signature. 

This plan would be the first major extension of provisions brought about by February's economic stimulus package. The $8,000 tax credit is slated to expire this month, but with the extension it will continue until April 30 and be expanded to include people with higher incomes and some who already own homes. It will cost around $10 billion in the fiscal year that began on Oct. 1, said Congress's Joint Committee on Taxation. 

The new bill includes $2.4 billion to extend unemployment perks for as many as 20 weeks, which will aid those who are currently unemployed during the holiday season. It will also create more lenient tax rules for homebuilders and other companies who are currently losing money to let them claim around $33 billion in tax refunds this year, according to the Joint Committee on Taxation. This legislation was delayed for several weeks by Republican demands for votes on amendments to the plan. 

Congressmen are still debating whether to extend other elements of the stimulus package, such as subsidies to help the jobless buy health insurance and increased funds for food stamps. Obama called for sending seniors $250 checks because they will not get a cost-of-living increase next year in their Social Security checks. 

The Senate plan will also allow homebuyers who have lived in their homes for at least five years to receive a $6,500 credit. Couples who earn as much as $225,000 a year and individuals who earn up to $125,000 would qualify. The current limits are $150,000 and $75,000, respectively. The bill would also provide 14 additional weeks of unemployment benefits in every state, plus 6 more weeks in states with the highest unemployment rates. This would be the fourth extension since the recession began. Currently, the unemployment rate for those who have been out of work for six months or more is the highest it has been in half a century, according to information from the Labor Department. 

The bill would also broaden provisions to the stimulus package and allow companies to apply their losses to previous years' income, thus reducing their tax bills and enabling them to claim refunds. Banks and institutions that receive assistance from the TARP program would not be eligible, however. 

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