Credit for certain home purchases

(a)

Allowance of credit

Subpart A of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to refundable credits) is amended by inserting after section 25D the following new section:

25E.

Credit for certain home purchases

(a)

Allowance of credit

In the case of an individual who purchases a principal residence in the United States during the 12-month period beginning on the date of the enactment of this section, there shall be allowed to the taxpayer 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)

Dollar limitation

The credit allowed under subsection (a) shall not exceed $10,000. (2)

Denial of credit for residences acquired with nonconforming loans

No credit shall be allowed under subsection (a) with respect to the purchase of any residence if the aggregate acquisition indebtedness (as defined in section 163(h)(3)(B)) with respect to such residence exceeds the limitation on the maximum original principal obligation of a mortgage that may be purchased by the Federal Home Loan Mortgage Corporation (as such limitation is in effect at the time of such purchase). (3)

Limitation based on amount of tax

In the case of a taxable year to which section 26(a)(2) does not apply, the credit allowed under subsection (a) for any taxable year shall not exceed the excess of— (A)the sum of the regular tax liability (as defined in section 26(b)) plus the tax imposed by section 55, over (B)the sum of the credits allowable under this subpart (other than this section) for the taxable year. (4)

One-time only

(A)

In general

If a credit is allowed under this section in the case of any individual (and such individual’s spouse, if married) with respect to the purchase of any principal residence, no credit shall be allowed under this section in any taxable year with respect to the purchase of any other principal residence by such individual or a spouse of such individual. (B)

Joint purchase

In the case of a purchase of a principal residence by 2 or more unmarried individuals or by 2 married individuals filing separately, no credit shall be allowed under this section if a credit under this section has been allowed to any of such individuals in any taxable year with respect to the purchase of any other principal residence. (c)

Carryforward of unused credit

(1)

Rule for years in which all personal credits allowed against regular and alternative minimum tax

In the case of a taxable year to which section 26(a)(2) applies, if the credit allowable under subsection (a) exceeds the limitation imposed by section 26(a)(2) for such taxable year reduced by the sum of the credits allowable under this subpart (other than this section), such excess shall be carried to the succeeding taxable year and added to the credit allowable under subsection (a) for such succeeding taxable year. (2)

Rule for other years

In the case of a taxable year to which section 26(a)(2) does not apply, if the credit allowable under subsection (a) exceeds the limitation imposed by subsection (b)(3) for such taxable year, such excess shall be carried to the succeeding taxable year and added to the credit allowable under subsection (a) for such succeeding taxable year. (3)

Limitation

No credit may be carried forward under this subsection to any taxable year following the first taxable year after the taxable year in which the credit arose. (d)

Definitions and special rules

For purposes of this section— (1)

Allocation of dollar limit

(A)

Married individuals filing separately

In the case of a married individual filing a separate return, subsection (b)(1) shall be applied by substituting $5,000 for $10,000. (B)

Other individuals

If two or more individuals who are not married purchase a principal residence, 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 $10,000. (2)

Principal residence

The term principal residence has the same meaning as when used in section 121. (3)

Purchase

(A)

In general

The term purchase means any acquisition, but only if— (i)the property is not acquired from a person related to the person acquiring it, and (ii)the basis of the property in the hands of the person acquiring it 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 on the date the taxpayer first occupies such residence. (4)

Purchase price

The term purchase price means the adjusted basis of the principal residence on the date such residence is purchased. (5)

Related persons

A person shall be treated as related to another person if the relationship between such persons would result in the disallowance of losses under section 267 or 707(b) (but, in applying section 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). (e)

Exceptions

No credit under subsection (a) shall be allowed to any taxpayer for any taxable year with respect to the purchase of a residence if— (1)a credit under section 1400C (relating to first-time homebuyer in the District of Columbia) is allowable to the taxpayer (or the taxpayer’s spouse) for such taxable year or any prior taxable year, (2)the taxpayer is a nonresident alien, or (3)the taxpayer disposes of such residence (or such residence ceases to be the principal residence of the taxpayer (and, if married, the taxpayer’s spouse)) before the close of such taxable year. (f)

Reporting requirement

Rules similar to the rules of section 1400C(f) (as so in effect) shall apply. (g)

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. (h)

Application

This section shall not apply to any taxable year beginning after December 31, 2009.

(b)

Conforming amendments

(1)Section 23(c)(1) of such Code is amended by striking 25D and 1400C and inserting 25D, 25E, and 1400C. (2)Section 25D(c)(2) of such Code is amended by striking and 25B and inserting 25B, and 25E. (3)Section 1400C(d)(1) of such Code is amended by striking section 25D and inserting sections 25D and 25E. (c)

Clerical amendment

The table of sections for subpart A of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after the item relating to section 25D the following new item:

Sec. 25E. Credit for certain home purchases.

(d)

Effective date

The amendments made by this section shall apply with respect to residences purchased after the date of the enactment of this Act in taxable years ending after such date.