[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 211 Introduced in House (IH)]







107th CONGRESS
  1st Session
                                H. R. 211

 To amend the Internal Revenue Code of 1986 to allow a credit against 
 income tax for the purchase of a principal residence by a first-time 
                               homebuyer.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            January 3, 2001

 Mr. Sweeney 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 allow a credit against 
 income tax for the purchase of a principal residence by a first-time 
                               homebuyer.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``First-Time Homebuyer Tax Credit Act 
of 2001''.

SEC. 2. CREDIT FOR FIRST-TIME HOMEBUYERS.

    (a) In General.--Subpart A of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to nonrefundable 
personal credits) is amended by inserting after section 25A the 
following new section:

``SEC. 25B. PURCHASE OF PRINCIPAL RESIDENCE BY FIRST-TIME HOMEBUYER.

    ``(a) Allowance of Credit.--In the case of an individual who is a 
first-time homebuyer of a principal residence in the United States 
during any taxable year, there shall be allowed as a credit against the 
tax imposed by this chapter for the taxable year an amount equal to 10 
percent of the purchase price of the residence.
    ``(b) Limitations.--
            ``(1) Maximum credit.--The credit allowed under subsection 
        (a) shall not exceed $5,000.
            ``(2) Married individuals filing jointly.--In the case of a 
        husband and wife who file a joint return, the credit under this 
        section is allowable only if both the husband and wife are 
        first-time homebuyers, and the amount specified under paragraph 
        (1) shall apply to the joint return.
            ``(3) Married individuals filing separately.--In the case 
        of a married individual filing a separate return, the credit 
        under this section is allowable only if the individual is a 
        first-time homebuyer, and subsection (a) shall be applied by 
        substituting `$2,500' for `$5,000'.
            ``(4) Other taxpayers.--In the case that 2 or more 
        individuals who are not married purchase a principal residence 
        together--
                    ``(A) the credit under this section is allowable 
                only if each of the individuals is a first-time 
                homebuyer, and
                    ``(B) the amount of the credit allowed under 
                subsection (a) shall be allocated among such 
                individuals in such manner as the Secretary may 
                prescribe, except that the total amount of the credits 
                allowed to all such individuals shall not exceed 
                $5,000.
            ``(5) Year for which credit allowed.--Fifty percent of the 
        credit allowed by subsection (a) shall be allowed in the 
        taxable year in which the residence is purchased and the 
        remaining fifty percent of the credit shall be allowed in the 
        succeeding taxable year.
    ``(c) Definitions.--For purposes of this section--
            ``(1) First-time homebuyer.--
                    ``(A) In general.--The term `first-time homebuyer' 
                has the same meaning as when used in section 
                72(t)(8)(D)(i), except that `3-year period' shall be 
                substituted for `2-year period' in subclause (I) 
                thereof.
                    ``(B) One-time only.--Except as provided in 
                subsection (f), if an individual is treated as a first-
                time homebuyer with respect to any principal residence, 
                such individual may not be treated as a first-time 
                homebuyer with respect to any other principal 
                residence.
            ``(2) Principal residence.--The term `principal residence' 
        has the same meaning as when used in section 121. An interest 
        in a partnership, S corporation, or trust that owns an interest 
        in a residence is not considered an interest in a residence for 
        purposes of this paragraph except as may be provided in 
        regulations.
            ``(3) Purchase.--
                    ``(A) In general.--The term `purchase' means any 
                acquisition, but only if--
                            ``(i) the property is not acquired from a 
                        person whose relationship to the person 
                        acquiring it would result in the disallowance 
                        of losses under section 267 or 707(b) (but, in 
                        applying sections 267 (b) and (c) for purposes 
                        of this section, paragraph (4) of section 
                        267(c) shall be treated as providing that the 
                        family of an individual shall include only his 
                        spouse, ancestors, and lineal descendants), and
                            ``(ii) the basis of the property in the 
                        hands of the person acquiring such property is 
                        not determined--
                                    ``(I) in whole or in part by 
                                reference to the adjusted basis of such 
                                property in the hands of the person 
                                from whom acquired, or
                                    ``(II) under section 1014(a) 
                                (relating to property acquired from a 
                                decedent).
                    ``(B) Construction.--A residence which is 
                constructed by the taxpayer shall be treated as 
                purchased by the taxpayer.
            ``(4) Purchase price.--The term `purchase price' means the 
        adjusted basis of the principal residence on the date of 
        acquisition (within the meaning of section 72(t)(8)(D)(iii)).
    ``(d) Carryforward of Unused Credits.--If the credit allowable 
under subsection (a) for any taxable year exceeds the limitation 
imposed by section 26(a) for such taxable year reduced by the sum of 
the credits allowable under this subpart (other than this section and 
section 23), such excess shall be carried to the succeeding taxable 
year and added to the credit allowable under subsection (a) for such 
taxable year. No credit may be carried forward under this subsection to 
any taxable year following the fifth taxable year after the taxable 
year in which the residence is purchased. For purposes of the preceding 
sentence, credits shall be treated as used on a first-in first-out 
basis.
    ``(e) Reporting.--If the Secretary requires information reporting 
under section 6045 by a person described in subsection (e)(2) thereof 
to verify the eligibility of taxpayers for the credit allowable by this 
section, the exception provided by section 6045(e)(5) shall not apply.
    ``(f) Recapture for Certain Dispositions.--
            ``(1) In general.--Except as provided in paragraphs (2) and 
        (3), if the taxpayer disposes of property with respect to the 
        purchase of which a credit was allowed under subsection (a) at 
        any time within 36 months after the date the taxpayer acquired 
        the property as his principal residence, then the tax imposed 
        under this chapter for the taxable year in which the 
        disposition occurs is increased by an amount equal to the 
        amount allowed as a credit for the purchase of such property.
            ``(2) Acquisition of new residence.--If, in connection with 
        a disposition described in paragraph (1) and within the 2-year 
        period beginning on the date of such disposition, the taxpayer 
        purchases a new principal residence--
                    ``(A) paragraph (1) shall not apply, and
                    ``(B) the tax imposed by this chapter for the 
                taxable year in which the new principal residence is 
                purchased is increased by an amount equal to--
                            ``(i) the amount of credit claimed by the 
                        taxpayer under this section, reduced (but not 
                        below zero) by
                            ``(ii) the amount of the credit that could 
                        be claimed under this section on the purchase 
                        of the new residence.
            ``(3) Death of owner; casualty loss; involuntary 
        conversion; etc.--The provisions of paragraph (1) do not apply 
        to--
                    ``(A) a disposition of a residence made on account 
                of the death of any individual having a legal or 
                equitable interest therein occurring during the 36-
                month period to which reference is made under paragraph 
                (1),
                    ``(B) a disposition of the old residence if it is 
                substantially or completely destroyed by a casualty 
                described in section 165(c)(3) or compulsorily or 
                involuntarily converted (within the meaning of section 
                1033(a)), or
                    ``(C) a disposition pursuant to a settlement in a 
                divorce or legal separation proceeding where the 
                residence is sold or the other spouse retains the 
                residence as a principal residence.
    ``(g) Denial of Double Benefit.--No credit shall be allowed under 
subsection (a) for any expense--
            ``(1) for which a deduction or credit is allowed under any 
        other provision of this chapter, or
            ``(2) to the extent that the aggregate of such expenses 
        does not exceed qualified first-time homebuyer distributions 
        (as defined by section 72(t)(8) made with respect to the 
        principle residence.
    ``(h) Basis Adjustment.--For purposes of this subtitle, if a credit 
is allowed under this section with respect to the purchase of any 
residence, the basis of such residence shall be reduced by the amount 
of the credit so allowed.
    ``(i) Property to Which Section Applies.--
            ``(1) In general.--The provisions of this section apply to 
        a principal residence if--
                    ``(A) the taxpayer acquires the residence on or 
                after January 1, 2001, and before January 1, 2003, or
                    ``(B) the taxpayer enters into, on or after January 
                1, 2001, and before January 1, 2003, a binding contract 
                to acquire the residence, and acquires and occupies the 
                residence before July 1, 2003.''.
    (b) Conforming Amendment.--Subsection (a) of section 1016 of such 
Code (relating to general rule for adjustments to basis) is amended by 
striking ``and'' at the end of paragraph (26), by striking the period 
at the end of paragraph (27) and inserting ``, and'', and by adding at 
the end thereof the following new paragraph:
            ``(28) in the case of a residence with respect to which a 
        credit was allowed under section 25B, to the extent provided in 
        section 25B(h).''.
    (c) Clerical Amendment.--The table of sections for subpart A of 
part IV of subchapter A of chapter 1 of such Code is amended by 
inserting after the item relating to section 25A the following new 
item:

                              ``Sec. 25B. Purchase of principal 
                                        residence by first-time 
                                        homebuyer.''.
    (d) Effective Date.--The amendments made by this section shall take 
effect on January 1, 2001.
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