Senate votes to extend tax credit; First-time homebuyers; Lawmakers also approve unemployment benefits for up to 20 additional weeks.

Byline: Jim Puzzanghera and Richard Simon; Tribune Washington Bureau

WASHINGTON -- The Senate on Wednesday voted to extend and expand a tax credit for homebuyers as an added boost for the recovering real-estate market and approved a provision to continue giving aid to the long-term unemployed.

The measure, adopted on a 98-0 vote, also would extend and expand a tax benefit for businesses with losses. The House is expected to follow suit within days, and President Obama is expected to sign it into law.

To keep fueling the real-estate rebound, the legislation would extend the $8,000 tax credit for first-time homebuyers to April 30. It now is set to expire at the end of the month. It also would provide a new $6,500 tax break for existing homeowners who want to move up to a new home, as long as they have lived in their current residence for five consecutive years of the past eight.

The bill also would increase the level of qualifying incomes to $125,000 for individual tax filers and $225,000 for joint filers. Those earning up to $145,000 individually or up to $245,000 jointly would receive a smaller credit that decreases as income rises.

The tax credits apply to home purchases of $800,000 or less.

"Every economist will tell you we have to steady the housing market before the economy will turn around," said Sen. Christopher Dodd, D-Conn. With the national unemployment rate at 9.8 percent and expected to go higher, senators voted to extend jobless benefits by 14 weeks in all states and 20 weeks in the hardest-hit states, including Washington.

The $2.4 billion extension of unemployment benefits gained bipartisan support after it was written to cover all states, making it more appealing to senators.

In addition, the measure would allow any company to use any losses this year or last year to offset taxes paid in the previous five years. A similar measure was in the economic-stimulus legislation approved earlier this year but was limited to small businesses.

FACTS

The day in D.C.

AARP support: Seniors' lobby AARP will endorse health-care-overhaul legislation headed for a House floor vote, officials said Wednesday. An announcement from the 40-million member group is expected today, said officials with knowledge of the group's decision who spoke on condition of anonymity.

Credit-card rules: The House voted 331-92 on Wednesday to immediately impose tough new rules for credit-card companies after voters complained of increased interest rates and steep new fees. The bill would accelerate the enactment date of legislation passed in the spring that limits when and how banks can charge borrowers. The proposal's chances in the Senate are dim.

Security scare: An unstamped letter from former Surgeon General C. Everett Koop turned into a security scare Wednesday as U.S. Capitol Police closed Senate Majority Leader Harry Reid's office for about 45 minutes. Police officials declined to provide specifics, but Capitol Hill newspaper Roll Call said Koop confirmed the letter was legitimate. He said the letter asked that health-care legislation include a provision to ensure doctors and medical students would not be forced to perform abortions. "I wasn't aware that sending a hand-delivered letter was an offense," he said.

Seattle Times news services

Copyright (c) 2009 Seattle Times Company, All Rights Reserved.