II 111th CONGRESS 1st Session S. 312 IN THE SENATE OF THE UNITED STATES January 22, 2009 Mr. Cardin (for himself and Mr. Ensign) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend the Internal Revenue Code of 1986 to allow a refundable credit against income tax for the purchase of a principal residence by a first-time homebuyer.

1.

Short title

This Act may be cited as the First-Time Homebuyers’ Tax Credit Act of 2009.

2.

Refundable credit for First-Time homebuyers

(a)

In general

Subpart C 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 36 the following new section:

36A.

Purchase of principal residence by first-time homebuyer

(a)

Allowance of credit

(1)

In general

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 subtitle for the taxable year an amount equal to so much of the purchase price of the residence as does not exceed $20,000. (2)

Taxable income limitation

No credit shall be allowed under subsection (a) if the taxpayer's adjusted gross income for the taxable year immediately preceding the taxable year in which the purchase of the principal residence occurs exceeds $75,000 ($150,000 in the case of a joint return). (b)

Definitions and special rules

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). (B)

One-time only

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. (C)

Married individuals filing jointly

In the case of married individuals who file a joint return, the credit under this section is allowable only if both individuals are first-time homebuyers. (D)

Other taxpayers

If 2 or more individuals who are not married purchase a principal residence— (i)the credit under this section is allowable only if each of the individuals is a first-time homebuyer, and (ii)the amount of the credit allowed under subsection (a) shall be allocated among such individuals in such manner as the Secretary may prescribe. (2)

Principal residence

The term principal residence has the same meaning as when used in section 121. Except as provided in regulations, an interest in a partnership, S corporation, or trust which owns an interest in a residence shall not be treated as an interest in a residence. (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 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 the individual’s spouse, ancestors, and lineal descendants), 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. (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)). (c)

Denial of double benefit

No credit shall be allowed under subsection (a) for any expense for which a deduction or credit is allowed under any other provision of this chapter. (d)

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. (e)

Property To which section applies

The provisions of this section shall apply to a principal residence if the taxpayer purchases the residence during the period beginning on the date of enactment, and ending on the date which is 1 year after such date.

. (b)

Conforming amendments

(1)Subsection (a) of section 1016 of the Internal Revenue Code of 1986 (relating to general rule for adjustments to basis) is amended by striking and at the end of paragraph (36), by striking the period at the end of paragraph (37) and inserting , and, and by adding at the end the following new paragraph: (38)in the case of a residence with respect to which a credit was allowed under section 36A, to the extent provided in section 36A(d). . (2)Section 1324(b)(2) of title 31, United States Code, is amended by inserting or 36A after 36. (c)

Clerical amendment

The table of sections for subpart C 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 36 the following new item: Sec. 36A. Purchase of principal residence by first-time homebuyer. .