Don't bet all your money on it quite yet, but it looks more and more likely that Congress will extend the housing tax credit beyond its scheduled termination date - and maybe even open it up to people who already own homes.

Late last week a bipartisan plan emerged in the Senate that would continue the $8,000 credit for first time purchasers beyond November 30, but would create a new, smaller credit of $6,500 for people who've owned and lived in their houses for five consecutive years and now want to buy another as their principal residence.

Under one version of the Senate plan, which reportedly has the support of top Democrats including Majority Leader Senator Harry Reid, the current $8,000 credit for first-timers would effectively be extended through next June 30.

However, buyers would need to have their contracts signed by April 30 and closed by July 1.

The credit program would also be opened up to a restricted segment of current home owners, those with at least five years in their current residences, but with the maximum tax credit amount capped at $6,500.

That would still be enough, sponsors of the plan believe, to encourage people now on the sidelines to get into the market for new and existing homes in early 2010 -- and thereby help stimulate the economy and create jobs.

The Senate plan would also raise household incomes limits for the credit to $125,000 for single buyers and $250,000 for married couples - far more generous than the current $75,000 and $150,000 maximums.

Extending the $8,000 credit, as it is now, has heavy bipartisan support on the House side as well. But key Democratic leaders there -- and at the Obama White House -- are concerned about the costs.

The current $8,000 credit costs the Treasury about a billion dollars a month in lost tax revenues, according to Congressional budget estimates. Opening up the program to existing home owners - even in a restricted way -- would add to that cost.

On the other hand, limiting any extension to six months would be less expensive than a full-year extension, as advocated by major housing lobbies, including the National Association of Realtors and the National Association of Home Builders.

So the issue on Capitol Hill appears to boil down to this: It's not so much a question of whether to extend the credit. Absent a political train wreck, the credit should survive beyond November 30

But for how long, and for whom, are the questions still not nailed down?

We'll keep you up to date.

Published: November 2, 2009

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Kenneth R. Harney writes an award-winning, nationally-syndicated column on housing and real estate from Washington, D.C. He is also managing director of the National Real Estate Development Center, a professional education company. He is a past member of the Federal Reserve Board's Consumer Advisory Council, a committee that by federal statute reviews all Fed actions on home mortgage, consumer credit and banking industry regulation. He served as a member of the U.S. Department of Housing and Urban Development's Working Group on Computerized Loan Origination (CLO) systems, and is a member of the Editorial Board of the Fannie Mae Foundation's journal, Housing Policy Debate. He is the author of two books on mortgage finance and real estate.