Senate Approves Homebuyer Tax Credit Extension

The U.S. Senate has voted unanimously to extend the $8,000 first-time homebuyer tax credit and extend a credit to existing homeowners as well, virtually guaranteeing that the popular program will continue past the current Nov. 30 deadline.

Approval by the House of Representatives and President Obama is considered certain. The House is expected to vote to approve the measure today and send it to the president for his signature.

The bill extends the $8,000 first-time homebuyer tax credit through April 30, 2010 and provides for a $6,500 tax credit for repeat home buyers who have been in their current home at least five years. Both credits are restricted to homes purchased for use as a primary residence; secondary residences and investment properties do not qualify.

The bill also raises the income limits for the tax credit, to $125,000 for single persons and $250,000 for couples. The current limits are $75,000 and $150,000. Reduced credits are available for single purchasers with incomes up to $145,000 and couples with incomes up to $245,000.

The new bill also sets a maximum home purchase price of $800,000 to qualify for the credit. Purchasers must use the house as their primary residence for at least three years or be required to repay the credit.

To qualify for the credit, homebuyers must have a purchase agreement signed by April 30, although actual closing on the property may be as late as June 30, 2010. Military personnel deployed overseas would have until April 30, 2011 to claim the credit.

The measure was passed as part of a bill extending unemployment benefits an additional 20 weeks in 24 states with high unemployment and 14 weeks in all others.