Last week senators reached a tentative agreement to extend the first-time homebuyer’s tax credit that was originally passed earlier this year as a part of the economic stimulus plan. The extension will act to further stimulate the U.S. housing market and help to alleviate some of the current economic challenges facing the nation.

The original plan allowed for a first-time homebuyer (those who have not owned a residence during the three years prior to the purchase) to receive up to 10% of the purchase price, up to $8,000 in a tax credit. This plan was set to end at the end of November, 2009.

Senate sources have confirmed a proposed extension of the tax credit to those signing sales agreements by the end of April, 2010, and closing by the end of June 2010. Senators are also considering a “reduced credit” to repeat homebuyers. The “reduced” $6,500 credit would apply to those who have owned their principal residences for at least five years.

Senators have not yet agreed on how the deal will pan out or even come up for a vote.

For additional information, and answers to frequently asked questions regarding the Homebuyer Tax Credit, see the IRS website at: http://www.irs.gov/newsroom/article/0,,id=204671,00.html