UPDATE 1-US Senate seen extending home buyer tax credit soon

* U.S. Senate to act this week on home buyers' tax credit

* Nelson: Senate to extend it for "limited" period

By Steve Holland

WASHINGTON, Oct 26 (Reuters) - The U.S. Senate should act later this week to extend a $8,000 tax credit for first-time home buyers that is scheduled to expire soon, Democratic Sen. Bill Nelson said on Monday.

"We should be able to extend that later this week," Nelson, a member of the Senate Finance Committee, told reporters before joining President Barack Obama on an Air Force One flight to Florida.

"The existing law ceases to exist on Nov. 1. This would be an extension for a limited period of time," Nelson said.

Nelson said the anticipated extension would be "for some period of months" but did not elaborate.

The U.S. real estate and homebuilding industry is lobbying Congress to extend the tax credit despite critics who say it gives cash to many buyers, who would have purchased a home without the tax credit.

The tax credit was approved in February 2008 and about 1.5 million tax returns filed with the Internal Revenue Service have claimed the credit at a cost of $10 billion, according to officials. A bipartisan group of lawmakers, including Senate Majority Leader Harry Reid and Senate Banking Chairman Christopher Dodd, back extension. (Reporting by Steve Holland, writing by Julie Vorman)