The Senate has passed a $123-billion measure that would extend a collection of tax breaks through December, including some that could benefit construction. The extensions would be retroactive, because many of the incentives have expired.

The largest item in the “extenders” bill, which the Senate approved March 10, would continue unemployment benefits and COBRA health-care coverage through 2010. Those provisions’ estimated 2010-2011 cost is $98.5 billion.

For the Real Estate Roundtable, the bill’s most important provision would extend 15-year depreciation for interior improvements to leaseholds and certain other facilities, says David F. Pearce Jr., vice president and counsel. It would apply to property put in service before Dec. 31, 2010.

Pearce says the 15-year schedule would bring the depreciation period closer to the seven- to 10-year lives of the improvements. If there’s no extension, developers would have to write off the upgrades’ cost over 39 years.

For the National Home Builders Association, key elements in the Senate bill include extending a $2,000 tax credit for builders who construct new homes that show a 50% reduction in energy use, compared with homes built to earlier standards, says Robert Dietz, NAHB assistant vice president for tax and policy issues.

Dietz also points to a provision allowing state housing agencies to exchange their low-income-housing tax credits for federal grants, at a time when private-sector interest in the credits has dropped.

The bill would extend property owners’ ability to “expense” the costs of cleaning up environmentally contaminated sites. Also extended would be enhanced tax credits for rehabilitating certain buildings and historic facilities in Gulf Coast areas that suffered hurricane damage.

The Senate bill would have to be reconciled with an extenders bill the House passed in December.