[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6373 Introduced in House (IH)]







110th CONGRESS
  2d Session
                                H. R. 6373

  To amend the Internal Revenue Code of 1986 to allow individuals to 
  establish Home Ownership Mortgage Expense Accounts (HOME Accounts) 
 which may be used to purchase, remodel, or make mortgage payments on 
                the principal residence of the taxpayer.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             June 25, 2008

 Mr. McCotter 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 individuals to 
  establish Home Ownership Mortgage Expense Accounts (HOME Accounts) 
 which may be used to purchase, remodel, or make mortgage payments on 
                the principal residence of the taxpayer.

    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 ``Responsible Investment for Home 
Ownership Act of 2008''.

SEC. 2. ESTABLISHMENT OF HOME OWNERSHIP MORTGAGE EXPENSE ACCOUNTS.

    (a) In General.--Part VII of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to additional itemized 
deductions for individuals) is amended by redesignating section 224 as 
section 225 and by inserting after section 223 the following new 
section:

``SEC. 224. HOME OWNERSHIP MORTGAGE EXPENSE ACCOUNTS.

    ``(a) Deduction Allowed.--In the case of an individual (other than 
an illegal alien), there shall be allowed as a deduction an amount 
equal to the aggregate amount paid in cash for the taxable year by such 
individual to a Home Ownership Mortgage Expense Account established for 
the benefit of such individual.
    ``(b) Maximum Amount of Deduction.--The amount allowable as a 
deduction under subsection (a) to any individual for any taxable year 
shall not exceed an amount equal to 50 percent of the limitation under 
section 219(b)(1) for such year, determined without regard to 
subparagraphs (B) and (C) of section 219(b)(5).
    ``(c) Reduction in Deduction Based on Adjusted Gross Income.--
            ``(1) In general.--The dollar limitation otherwise 
        applicable under subsection (b) for a taxable year shall be 
        reduced (but not below zero) by the amount determined under 
        paragraph (2).
            ``(2) Amount of reduction.--
                    ``(A) In general.--The amount determined under this 
                paragraph with respect to such dollar limitation shall 
                be the amount which bears the same ratio to such 
                limitation as--
                            ``(i) the excess of--
                                    ``(I) the taxpayer's adjusted gross 
                                income for such taxable year, over
                                    ``(II) the applicable dollar amount 
                                for such taxable year under section 
                                408A(c)(3) (relating to Roth IRA's), 
                                bears to
                            ``(ii) $10,000 ($20,000 in the case of a 
                        joint return for a taxable year).
                    ``(B) No reduction below $200 until complete phase-
                out.--Such dollar limitation shall not be reduced below 
                $200 under paragraph (1) unless (without regard to this 
                subparagraph) such limitation is reduced to zero.
                    ``(C) Rounding.--Any amount determined under this 
                paragraph which is not a multiple of $10 shall be 
                rounded to the next lowest $10.
            ``(3) Adjusted gross income.--For purposes of this 
        subsection, adjusted gross income shall be determined--
                    ``(A) without regard to this section and sections 
                911, 931, and 933, and
                    ``(B) after application of sections 86, 135, 137, 
                219, 221, 222, and 469.
    ``(d) Home Ownership Mortgage Expense Account.--For purposes of 
this section, the terms `Home Ownership Mortgage Expense Account' and 
`Home Account' mean a trust created or organized in the United States 
for the exclusive benefit of an individual, but only if the written 
governing instrument creating the trust meets the following 
requirements:
            ``(1) No contribution will be accepted unless it is in 
        cash.
            ``(2) The trustee is a bank (as defined in section 408(n)) 
        or another person who demonstrates to the satisfaction of the 
        Secretary that the manner in which that person will administer 
        the trust will be consistent with the requirements of this 
        section.
            ``(3) No part of the trust assets will be invested in any 
        collectible (as defined in section 408(m)).
            ``(4) The assets of the trust will not be commingled with 
        other property except in a common trust fund or common 
        investment fund.
    ``(e) Tax Treatment of Distributions.--
            ``(1) In general.--Except as otherwise provided in this 
        subsection, any amount distributed out of a HOME Account shall 
        be included in gross income by the distributee unless such 
        amount is part of a qualified home distribution.
            ``(2) Qualified home distribution.--For purposes of this 
        subsection--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the term `qualified home 
                distribution' means any payment or distribution 
                received by an individual to the extent such payment or 
                distribution is used by the individual within a 
                reasonable period to pay--
                            ``(i) qualified acquisition costs (as 
                        defined in section 72(t)(8)(C)) with respect to 
                        the principal residence (within the meaning of 
                        section 121) of such individual, or
                            ``(ii) costs to remodel such residence.
                    ``(B) Limitations.--
                            ``(i) Half of remodeling payments included 
                        in income.--50 percent of any qualified home 
                        distribution described in subparagraph (A)(ii) 
                        shall be included in gross income by the 
                        distributee.
                            ``(ii) Acquisition indebtedness on 
                        principal residence must be fixed rate and 
                        self-amortizing.--Subparagraph (A) shall apply 
                        to a distribution with respect to a principal 
                        residence only if, with respect to all 
                        acquisition indebtedness (as defined in section 
                        163(h)(3)(B)) secured by such residence--
                                    ``(I) the interest rate on the 
                                indebtedness is the same throughout the 
                                term of the indebtedness, and
                                    ``(II) substantially level 
                                amortization of such indebtedness (with 
                                payments not less frequently than 
                                quarterly) is required over the term of 
                                the indebtedness.
                            ``(iii) Debt payments may not be made.--In 
                        no event shall the term `qualified home 
                        distribution' include payment of principal or 
                        interest on any indebtedness.
            ``(3) Contributions returned before due date of return.--
        Paragraph (1) shall not apply to the distribution of any 
        contribution paid during a taxable year to a HOME Account if--
                    ``(A) such distribution is received on or before 
                the day prescribed by law (including extensions of 
                time) for filing such individual's return for such 
                taxable year,
                    ``(B) no deduction is allowed under this section 
                with respect to such contribution, and
                    ``(C) such distribution is accompanied by the 
                amount of net income attributable to such contribution.
        In the case of such a distribution, for purposes of section 61, 
        any net income described in subparagraph (C) shall be deemed to 
        have been earned and receivable in the taxable year in which 
        such contribution is made.
            ``(4) Additional tax on nonqualified distributions.--
                    ``(A) In general.--The tax imposed by this chapter 
                on the account beneficiary for any taxable year in 
                which there is a payment or distribution from a HOME 
                Account of such beneficiary which is includible in 
                gross income under this subsection shall be increased 
                by 10 percent of the amount which is so includible.
                    ``(B) Exception for disability or death.--
                Subparagraph (A) shall not apply if the payment or 
                distribution is made after--
                            ``(i) the account beneficiary becomes 
                        disabled (within the meaning of section 
                        72(m)(7)) or
                            ``(ii) dies.
                    ``(C) Exception for death only applies if qualified 
                home distributions made from account.--Subparagraph 
                (B)(ii) shall apply to the beneficiary of a HOME 
                Account only if, before the date of such beneficiary's 
                death, the aggregate qualified home distributions from 
                the HOME Accounts of such beneficiary are not less than 
                the aggregate deductible contributions to such 
                Accounts.
    ``(f) Tax Treatment of Accounts.--
            ``(1) Exemption from tax.--A HOME Account shall be exempt 
        from taxation under this subtitle unless such account has 
        ceased to be a HOME Account by reason of paragraph (2). 
        Notwithstanding the preceding sentence, HOME Accounts shall be 
        subject to the taxes imposed by section 511 (relating to 
        imposition of tax on unrelated business income of charitable, 
        etc. organizations).
            ``(2) Loss of exemption of account where individual engages 
        in prohibited transaction.--
                    ``(A) In general.--If, during any taxable year of 
                the individual for whose benefit the HOME Account is 
                established, that individual engages in any transaction 
                prohibited by section 4975 with respect to the account, 
                the account shall cease to be a HOME Account as of the 
                first day of that taxable year
                    ``(B) Account treated as distributing all its 
                assets.--In any case in which any account ceases to be 
                a HOME Account by reason of subparagraph (A) on the 
                first day of any taxable year, subsection (e)(1) shall 
                be applied as if there were a distribution on such 
                first day in an amount equal to the fair market value 
                (on such first day) of all assets in the account (on 
                such first day).
            ``(3) Effect of pledging account as security.--If, during 
        any taxable year, an individual for whose benefit a HOME 
        Account is established uses the account or any portion thereof 
        as security for a loan, the portion so used shall be treated as 
        distributed to that individual.
            ``(4) Rollover contributions.--Subsection (e)(1) shall not 
        apply to any amount paid or distributed out of a HOME Account 
        to the individual for whose benefit the account is maintained 
        if such amount is paid into another HOME Account for the 
        benefit of such individual not later than the 60th day after 
        the day on which he receives the payment or distribution.
    ``(g) No Contributions After Beneficiary Attains Age 59\1/2\.--No 
deduction shall be allowed under this section with respect to any 
contribution for the benefit of an individual if such individual has 
attained age 59\1/2\ before the close of such individual's taxable year 
for which the contribution was made.
    ``(h) Termination of Account When Beneficiary Attains Age 70\1/
2\.--As of the close of the calendar year in which the beneficiary of a 
HOME Account attains age 70\1/2\--
            ``(1) such Account shall cease to be a HOME Account, and
            ``(2) an amount equal to the fair market value of the 
        assets in such Account on such date shall be includible in such 
        beneficiary's gross income for the taxable year which includes 
        the last day of such calendar year.
    ``(i) Treatment After Death of Account Beneficiary.--
            ``(1) Treatment if designated beneficiary is spouse.--If--
                    ``(A) the account beneficiary's surviving spouse 
                acquires such beneficiary's interest in a HOME Account 
                by reason of being the designated beneficiary of such 
                account at the death of the account beneficiary, and
                    ``(B) such surviving spouse has not attained age 
                70\1/2\ as of the date of the death of the account 
                beneficiary,
        such HOME Account shall be treated as if the spouse were the 
        account beneficiary.
            ``(2) Other cases.--If, by reason of the death of the 
        account beneficiary, any person acquires the account 
        beneficiary's interest in a HOME Account in a case to which 
        paragraph (1) does not apply--
                    ``(A) such account shall cease to be a HOME Account 
                as of the date of death, and
                    ``(B) an amount equal to the fair market value of 
                the assets in such account on such date shall be 
                includible if such person is not the estate of such 
                beneficiary, in such person's gross income for the 
                taxable year which includes such date, or if such 
                person is the estate of such beneficiary, in such 
                beneficiary's gross income for the last taxable year of 
                such beneficiary.
    ``(j) Certain Rules To Apply.--Rules similar to the following rules 
shall apply for purposes of this section:
            ``(1) Section 219(d)(2) (relating to no deduction for 
        rollovers).
            ``(2) Section 219(f)(3) (relating to time when 
        contributions deemed made).
            ``(3) Except as provided in section 106(d), section 
        219(f)(5) (relating to employer payments).
            ``(4) Section 219(f)(6) (relating to excess contributions 
        treated as contribution made during subsequent year for which 
        there is an unused limitation).
            ``(5) Paragraphs (4) and (5) of 408(d) (relating to excess 
        contributions).
            ``(6) Section 408(d)(6) (relating to transfer of account 
        incident to divorce).
            ``(7) Section 408(g) (relating to community property laws).
            ``(8) Section 408(h) (relating to custodial accounts).
    ``(k) Reports.--
            ``(1) In general.--The trustee of a HOME Account shall make 
        such reports regarding such account to the Secretary and to the 
        individual for whose benefit the account is maintained with 
        respect to contributions, distributions, and such other matters 
        as the Secretary may require under regulations. The reports 
        required by this subsection shall be filed at such time and in 
        such manner and furnished to such individuals at such time and 
        in such manner as may be required by those regulations.
            ``(2) Notice of post-59\1/2\ tax provisions.--In addition 
        to the reports required under paragraph (1), the trustee of a 
        HOME Account shall, not later than the first January 31 
        following the calendar year in which the account beneficiary 
        attains age 59\1/2\, provide such beneficiary (in such manner 
        as the Secretary shall prescribe) with a notice describing the 
        application of--
                    ``(A) subsection (e)(4) (relating to additional tax 
                on nonqualified distributions),
                    ``(B) subsection (h) (relating to termination of 
                account when beneficiary attains age 70\1/2\), and
                    ``(C) subsection (i) (relating to treatment after 
                death of account beneficiary).
    ``(l) Illegal Alien.--For purposes of this section, the term 
`illegal alien' means an alien who--
            ``(1) entered the United States without inspection or at 
        any time or place other than that designated by the Secretary 
        of Homeland Security;
            ``(2) was admitted as a nonimmigrant and, at the time the 
        alien was taken into custody by the State or political 
        subdivision, had failed to--
                    ``(A) maintain the nonimmigrant status in which the 
                alien was admitted or to which it was changed under 
                section 248 of the Immigration and Nationality Act; or
                    ``(B) comply with the conditions of the status 
                described in subparagraph (A);
            ``(3) was admitted as an immigrant and subsequently failed 
        to comply with the requirements of that status; or
            ``(4) failed to depart the United States as required under 
        a voluntary departure agreement or under a final order of 
        removal.''.
    (b) Deduction Allowed in Arriving at Adjusted Gross Income.--
Subsection (a) of section 62 of such Code (defining adjusted gross 
income) is amended by inserting before the last sentence the following 
new paragraph:
            ``(22) HOME account contributions.--The deduction allowed 
        by section 224 (relating to HOME Accounts).''.
    (c) Coordination With Other Limitations Based on Adjusted Gross 
Income.--
            (1) Sections 86(b)(2)(A), 135(c)(4)(A), 137(b)(3)(A), and 
        221(b)(2)(C)(i) of such Code are each amended by inserting 
        ``224,'' after ``222,''.
            (2) Clause (i) of section 222(b)(2)(C) of such Code is 
        amended by inserting ``224,'' after ``199,''.
    (d) Tax on Excess Contributions.--
            (1) In general.--Subsection (a) of section 4973 of such 
        Code (relating to tax on excess contributions to certain tax-
        favored accounts and annuities) is amended by striking ``or'' 
        at the end of paragraph (4), by inserting ``or'' at the end of 
        paragraph (5), and by inserting after paragraph (5) the 
        following new paragraph:
            ``(6) a HOME Account (as defined in section 224(d)),''.
            (2) Excess contributions.--Section 4973 of such Code is 
        amended by adding at the end the following new subsection:
    ``(h) Excess Contributions to HOME Accounts.--For purposes of this 
section, in the case of HOME Accounts (as defined in section 224(d)), 
the term `excess contributions' means the sum of--
            ``(1) the excess (if any) of--
                    ``(A) the amount contributed for the taxable year 
                to the accounts (other than a rollover contribution), 
                over
                    ``(B) the amount allowable as a deduction under 
                section 224 for such contributions,
            ``(2) the amount determined under this subsection for the 
        preceding taxable year reduced by the sum of--
                    ``(A) the distributions out of the account for the 
                taxable year which were included in the gross income of 
                the payee under section 224(e)(1),
                    ``(B) the distributions out of the account for the 
                taxable year to which the rules similar to the rules of 
                section 408(d)(5) apply, and
                    ``(C) the excess (if any) of the maximum amount 
                allowable as a deduction under section 224 for the 
                taxable year over the amount contributed (determined 
                without regard to the rules referred to in section 
                219(g)(4)) to the accounts for the taxable year.
        For purposes of this subsection, any contribution which is 
        distributed from a HOME Account in a distribution to which 
        rules similar to the rules of section 408(d)(4) apply shall be 
        treated as an amount not contributed.''.
    (e) Tax on Prohibited Transactions.--
            (1) Paragraph (1) of section 4975(e) of such Code (relating 
        to prohibited transactions) is amended by redesignating 
        subparagraphs (F) and (G) as subparagraphs (G) and (H), 
        respectively, and by inserting after subparagraph (E) the 
        following new subparagraph:
                    ``(F) a HOME Account described in section 
                224(d),''.
            (2) Subsection (c) of section 4975 of such Code is amended 
        by adding at the end the following new paragraph:
            ``(7) Special rule for home accounts.--An individual for 
        whose benefit a HOME Account (as defined in section 224(d)) is 
        established shall be exempt from the tax imposed by this 
        section with respect to any transaction concerning such account 
        (which would otherwise be taxable under this section) if, with 
        respect to such transaction, the account ceases to be a HOME 
        Account by reason of the application of section 224(f)(2)(A) to 
        such account.''.
    (f) Failure To Provide Reports on HOME Accounts.--Paragraph (2) of 
section 6693(a) of such Code is amended by redesignating subparagraphs 
(D) and (E) as subparagraphs (E) and (F), respectively, and by 
inserting after subparagraph (C) the following new subparagraph:
                    ``(D) section 224(k) (relating to HOME 
                Accounts),''.
    (g) Clerical Amendment.--The table of sections for part VII of 
subchapter B of chapter 1 of such Code is amended by striking the item 
relating to section 224 and inserting the following:

``Sec. 224. HOME Accounts.
``Sec. 225. Cross reference.''.
    (h) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.
                                 <all>