Top Democrats in the Senate have reached an agreement to extend the soon-to-expire $8,000 tax credit for first-time homebuyers, Senate Banking Committee Chairman Christopher Dodd said Tuesday. Dodd did not offer any details on the extension, but said that “it was done”.

 

As part of a package that would extend unemployment benefits, the vote is expected Tuesday evening. According to a top Republican, there is still some negotiating to be completed on the proposal.

The popular tax credit, which has helped lift the housing market out of its worst slump since the Great Depression, is set to expire on Nov. 30, 2009.

Dodd and Republican Johnny Isakson want to extend the credit through June of next year and broaden it to anyone buying a primary residence, not just first-time buyers.

 

Senate Majority Leader Harry Reid had backed a narrower version which would extend the full credit through March and gradually phase it out through the end of 2010, through decreasing increments of tax credits. Dodd said that the deal would merge the two proposals.

The next stop for this bill would be the House, which has yet to discuss it.

According to the White House, an extension of the credit would cost tax payers as much as $1 Billion.

An extension of the tax credit, as well as extending it to all purchasers and not just first time home buyers would, in all likelihood, would put an end to the current housing crisis. Should this bill not be passed, the housing market is likely to continue to see a flood of foreclosures for several more years.