In a bid to give another shot in the arm to the housing market, Senate Democrats reached an agreement on Wednesday that would extend the $8,000 first-time home buyer tax credit and introduce a new credit for existing homeowners. This is a tentative compromise worked out by some Senate members and the specifics could still change.
If the measure passes, homeowners would be eligible for a credit of up to $6,500 if they have lived in their prior residence for five years. The credit would apply to home purchases under contract by April 30, 2010 as long as they close by June 30. First-time buyers would continue to be eligible for up to $8,000.
As for income limits, the new credit would be available to individuals earning up to $125,000 or couples earning $250,000. That’s up from $75,000 and $150,000, respectively, for the current tax credit, which is set to expire on Nov. 30.