WASHINGTON -(Dow Jones)- The U.S. Senate voted Wednesday to approve an extension of a tax credit for homebuyers as lawmakers continue to debate a wide- ranging bill of tax policy extensions and federal program renewals.
The measure was backed by Senate Majority Leader Harry Reid (D., Nev.), whose state has been among the hardest hit by the housing crisis over the last three years.
Reid, who is seeking his fifth term in November, is facing a tough re-election fight.
The amendment was added to a $140 billion tax bill that renews a series of popular tax credits targeted at businesses and individuals, continues federal programs including jobless benefits and a flood insurance program, boosts fiscal aid to states and averts reductions in payments to doctors who treat Medicare patients.
The vote to add the amendment was 60-37.
The homebuyers credit was agreed to last year as a means to kick start the moribund U.S. housing market, which was facing both historic foreclosure levels and a glut of unsold properties.
While the market has shown signs of stabilizing, it is still grim in some of the worst affected parts of the country.
The measure provided up to $8,000 for first-time homebuyers and a maximum of $ 6,500 for repeat purchasers as long as the property they are buying is to be their primary residence.
Under the amendment, house purchase contracts would still have had to be entered into by April 30 in order to qualify for the tax rebates. But buyers would now be given until Sept. 30 to close the purchase.
According to an aide to the majority leader, the cost of the extension would be $140 million over 10 years. But the amendment also includes language ending the ability of businesses to take a deduction on damages paid in settling a lawsuit or judgment, a change that would raise $315 million over the next decade. This would mean the net impact of the change would be to reduce cost of the bill by $175 million over that period.