[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 644 Introduced in House (IH)]

103d CONGRESS
  1st Session
                                H. R. 644

   To amend the Internal Revenue Code of 1986 to expand the one-time 
   exclusion of gain from sale of a principal residence based on the 
           amount of increase in equity in the new residence.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            January 26, 1993

   Mr. Thomas of California introduced the following bill; which was 
              referred to the Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
   To amend the Internal Revenue Code of 1986 to expand the one-time 
   exclusion of gain from sale of a principal residence based on the 
           amount of increase in equity in the new residence.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. EXPANSION OF ONE-TIME EXCLUSION OF GAIN FROM SALE OF 
              PRINCIPAL RESIDENCE.

    (a) In General.--Section 121 of the Internal Revenue Code of 1986 
(relating to one-time exclusion of gain from sale of principal 
residence by individual who has attained age 55) is amended by adding 
at the end thereof the following new subsection:
    ``(e) Election To Compute Maximum Exclusion Based on Increase in 
Equity.--
            ``(1) In general.--If--
                    ``(A) the taxpayer meets the holding and use 
                requirements of subsection (a) with respect to the sale 
                or exchange of any property, and
                    ``(B) the requirements of section 1034 for 
                nonrecognition of gain on such sale or exchange are met 
                (without regard to the limitation based on the 
                taxpayer's cost of purchasing the new residence),
        then, at the election of the taxpayer, in lieu of applying the 
        dollar limitation under subsection (b)(1), the maximum amount 
        of gain excluded from gross income under subsection (a) shall 
        be determined under this subsection and subsection (a) shall be 
        applied by substituting `age 45' for `age 55'.
            ``(2) Limitation.--
                    ``(A) In general.--The limitation determined under 
                this subsection is the amount equal to the excess of--
                            ``(i) the taxpayer's equity in the new 
                        residence, over
                            ``(ii) the taxpayer's equity in the old 
                        residence.
                    ``(B) Equity in residence.--For purposes of 
                subparagraph (A), the taxpayer's equity in a residence 
                is the excess of--
                            ``(i) the taxpayer's adjusted basis in the 
                        residence, over
                            ``(ii) the amount of indebtedness secured 
                        by such residence.
                In the case of the old residence, the amount described 
                in clause (ii) shall be determined without regard to 
                indebtedness incurred during the 5-year period ending 
                on the date of the sale of the old residence unless 
                such indebtedness was incurred in acquiring, 
                constructing, or substantially improving the old 
                residence.
            ``(3) Recapture of benefit if indebtedness securing 
        residence increases.--If, as of the close of any taxable year--
                    ``(A) the amount of indebtedness securing the 
                taxpayer's principal residence exceeds
                    ``(B) the amount taken into account under paragraph 
                (2)(A)(i),
        such excess shall be included in gross income for such year as 
        gain from the sale of a capital asset held for more than 1 
        year.
            ``(4) Subsequent election permitted.--Any election under 
        subsection (a) with respect to the sale or exchange of any 
        property to which an election under this subsection applies 
        shall not be taken into account in determining whether any 
        subsequent election may be made under subsection (a) by the 
        taxpayer.
            ``(5) Definitions.--Terms used in this subsection which are 
        also used in section 1034 shall have the meanings given such 
        terms by section 1034.''
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to sales and exchanges after the date of the enactment of this 
Act.

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