WASHINGTON (CNN) – Two U.S. senators on Thursday confirmed a bipartisan deal intended to extend the first-time homebuyers' tax credit that was originally passed earlier this year as part of the economic stimulus bill.
Democratic Sen. Christopher Dodd of Connecticut and Republican Sen. Johnny Isakson of Georgia told a news conference the plan would help the U.S. housing market at a time of decreased home values that have contributed to the economic recession.
The original credit in the stimulus bill is set to expire at the end of November and offers a tax credit of $8,000 to first-time homebuyers.
Under the agreement announced by Dodd and Isakson, proposed legislation that must pass both chambers of Congress and then be signed by President Barack Obama would extend that $8,000 credit for first-time buyers until the end of next April. In addition, the measure would add a separate $6,500 credit for some current homeowners who buy a new residence by then.
To qualify, current homeowners must have lived in their primary residence for five continuous years. The deal also would increase the maximum income for participants from $75,000 for an individual and $150,000 for a couple to $125,000 for an individual and $225,000 for a couple.
Isakson said the bill would cost $10.2 billion and generate a $10.5 billion payoff to the U.S. Treasury for a net gain of almost $300 million. He emphasized the tax credits would end next year, so Americans must act now to benefit from them.
"Tax credits like this only work by creating the sense of urgency to take advantage of them and to bring the market back," Isakson said. "So the American people and the potential homebuyers of the United States, and home-sellers, for that matter, have an opportunity, in the next seven months, to take advantage of a once-in-a-lifetime credit, and help us bring the housing market back to some sense of vitality."
Dodd said extending and expanding the homebuyers' credit would "make a difference to so many middle-income families." He said most people rely on home equity for their wealth, and noted 15 million U.S. homes had mortgages exceeding their value with thousands of foreclosures occurring every day.
"This isn't the only answer, obviously," Dodd said of renewing the confidence of consumers, "but I think at a time when that's been lagging and sagging, this can help."
Senators have not agreed on how the tentative deal would come up for a vote, but sources from both parties said they are considering adding the housing credit to a bill that would extend unemployment benefits.
On the House side, Speaker Nancy Pelosi has indicated she also is interested in extending the homeowner credit, but House leaders have yet to endorse any one bill.