House seen expanding home buyer tax break: Hoyer

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House seen expanding home buyer tax break: Hoyer

By Corbett B. Daly | 03 November 2009 @ 01:59 pm EDT

WASHINGTON - The U.S. House of Representatives is expected to back a Senate plan to extend a popular homebuying tax credit through April and also expand its scope, House Majority Leader Steny Hoyer said on Tuesday.

"I would prefer that they had not done the changes ..., but they did and I think that they'll be acceptable and I was pleased that April 30th is their date for eliminating this program," Hoyer told reporters on Capitol Hill.

The Senate is considering expanding the popular housing tax credit as part of a larger piece of legislation aimed at extending insurance benefits for jobless workers. It is expected to vote on the measure this week.

The current $8,000 credit, which expires at the end of the month, has been available only to first-time buyers, but the Senate is considering expanding it to repeat buyers.

The House, which would have to approve the measure before sending it to President Barack Obama for his signature, is expected to take up the measure next week.

Some House Democrats, including Hoyer, had expressed concern about the cost of expanding the credit.

Under the new language in the Senate, homeowners who have lived in their home for five of the past eight years would be eligible to receive a $6,500 tax credit, while first-time buyers would still be eligible for an $8,000 credit.

The proposal would also increase the income limits of those eligible for the program, to $125,000 per year for individuals and $225,000 for couples.

The bill's chief proponent, Senator Johnny Isakson, a Georgia Republican and a former real estate agent, said expansion would cost about $10.2 billion over 10 years and would be paid for with offsetting cuts elsewhere in the budget. Simply extending the current tax credit is estimated to cost $1 billion a month.

The tax credit would apply for homes under contract by the end of April, although buyers would have until the end of June to close on the purchase.

Analysts say the credit has helped the housing market, although critics question whether the value is worth the cost.

The Obama administration has urged Congress to extend the credit but has been conspicuously silent on expansion. Senate Banking Committee Chairman Chris Dodd said he expects Obama to back an expansion.

(Additional reporting by Donna Smith; Editing by Chizu Nomiyama and Dan Grebler)