Senate backs housing bill heavy on tax breaks

By Kevin Drawbaugh

WASHINGTON (Reuters) - The U.S. Senate on Thursday voted overwhelmingly to approve a $15 billion bill tackling the nation's housing market crisis with tax breaks for corporations and some assistance for distressed homeowners.

The legislation is opposed by the White House, and has been criticized as too laden with business tax breaks by some lawmakers. The House of Representatives, where the bill will go next, is working on a narrower housing plan that focuses on tax breaks for homeowners.

Illinois Sen. Barack Obama, a Democratic presidential hopeful, said the Senate bill was a good start but didn't go far enough.

"The heavy hand of special interests has again had too much influence on this bill," Obama said. "Special interests have insisted on putting in unnecessary tax breaks for the profits enjoyed by home builders during their boom years, and on keeping out a change to our bankruptcy laws that would remove preferential treatment for mortgage lenders."

At a cost of $15 billion over 10 years, the Senate bill would give a $6 billion tax break to home builders by temporarily extending a rule that lets businesses count current losses against taxes from prior profitable years.

The National Association of Home Builders in January took the unusual step of halting all congressional campaign contributions after a tax break like the one in the new housing bill was dropped from an earlier economic stimulus package.

Industry analysts said home builders such as Pulte Homes and KB Home would benefit from the proposed two-year extension of the net operating loss carry-back rule, which is not in the bill being developed by the House.

Shares of Pulte closed up nearly 3 percent to $14.42 while KB Home was up 0.8 percent at $24.72 at the close on the New York Stock Exchange.