Senate approves extension to qualify for homebuyer tax credit

By a 60-37 vote, the Senate on Wednesday approved a measure extending the closing deadline for qualifying for the homebuyer tax credit. 

The proposal is expected to be added to a slimmed-down tax extenders bill that Senate Democratic leaders are expected to unveil Wednesday. 

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To qualify for the credit, homebuyers have until June 30 to close on the purchase. The proposal pushes the closing deadline back to Sept. 30, 2010. 

 Senate Majority Leader Harry Reid (D-Nev.), Senate Banking Chairman Chris Dodd (D-Conn.) and Sen. Johnny Isakson (R-Ga.) authored the proposal. 

The senator from Georgia tried but failed to offset the amendment's cost with unspent stimulus dollars. His proposal failed by a 45-52 vote. 

The proposal that is expected to be added to the extender bill is offset by denying the tax deduction for certain punitive damages, which raises $315 million over 10 years. 

The cost for extending the closing date is $140 million, which means the provision reduces the deficit by $175 million over 10 years.  

Congress originally passed an $8,000 tax credit for first-time homebuyers as part of the stimulus bill President Barack Obama signed into law in February of 2009. 

Lawmakers extended and expanded the measure last November to include a $6,500 tax credit for buyers who have already owned a home. Both of these measures expired at the end of April for buyers that enter into a contract to purchase a home. Wednesday's measure only extends the cut off date for closing on the property.