Nonrefundable personal credit for natural disaster mitigation property

(a)

In general

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

25E.

Natural disaster mitigation property

(a)

Allowance of credit

In the case of an individual, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to 25 percent of the qualified natural disaster mitigation property expenditures made by the taxpayer during such taxable year in connection with a qualified principal residence of the taxpayer. (b)

Maximum credit

The credit allowed under subsection (a) with respect to any principal residence of the taxpayer for any taxable year shall not exceed the excess of— (1)$5,000 (half such amount in the case of a married individual filing a separate return), over (2)the aggregate amounts allowed as a credit under this section to the taxpayer (or the taxpayer’s spouse) with respect to such residence for all prior taxable years. (c)

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— (1)the sum of the regular tax liability (as defined in section 26(b)) plus the tax imposed by section 55, over (2)the sum of the credits allowable under this subpart (other than this section and sections 23, 24, and 25B) and section 27 for the taxable year. (d)

Qualified natural disaster mitigation property expenditure

For purposes of this section, the term qualified natural disaster mitigation property expenditure means an expenditure for— (1)property to improve the strength of a roof deck attachment, (2)property to create a secondary water barrier to prevent water intrusion, (3)property to improve the durability of a roof covering, (4)property to brace gable-end walls, (5)property to reinforce the connection between a roof and supporting wall, (6)property to protect openings from penetration by windborne debris, (7)property to protect exterior doors and garages, (8)property to improve the natural resiliency of the property, including the restoration, establishment, or enhancement of aquatic resources (having the meanings given such terms by part 332 of title 33 of the Code of Federal Regulations), as prescribed by the Secretary after consultation with the Administrator of the Environmental Protection Agency and the Assistant Secretary of the Army for Civil Works, (9)seismic retrofitting, including property to increase resistance to seismic activity, ground motion, or soil failure due to earthquakes, or (10)such other measures to mitigate natural disaster damage to homes, as prescribed by the Secretary after consultation with the Administrator of the Federal Emergency Management Agency and, to the extent applicable, in accordance with section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note; Public Law 104–113). (e)

Qualified principal residence

For purposes of this section, the term qualified pricnipal residence means the principal residence of the taxpayer (within the meaning of section 121) if such residence— (1)is assessed by the locality in which it is located at a value which does not exceed 300 percent of the national median home price (determined as of the close of the taxable year for which the credit determined under this section is allowed), and (2)is not severe repetitive loss property (as defined in section 1361A of the National Flood Insurance Act (42 U.S.C. 4102a(b))). (f)

Rules related to inspections and labor costs

For purposes of this section— (1)

Inspection requirement

An expenditure shall be taken into account in determining the qualified natural disaster mitigation property expenditures made by the taxpayer during the taxable year only if the installation of the property with respect to which such expenditure is made has been completed in a manner that is deemed to be adequate by an inspector that is licensed or certified by the State or other governmental authority, or its designee, having jurisdiction over inspectors in the area where the installed property is located. (2)

Labor and inspection costs

For purposes of this section, expenditures for labor costs properly allocable to the onsite preparation, assembly, or original installation of the property described in subsection (d) (including the cost of inspections referred to in paragraph (1)) shall be taken into account in determining the qualified natural disaster mitigation property expenditures made by the taxpayer during the taxable year. (g)

Basis adjustment

For purposes of this section, if a credit is allowed under this section for any expenditure with respect to any property, the increase in the basis of such property which would (but for this subsection) result from such expenditure shall be reduced by the amount of the credit so allowed.

(b)

Conforming 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 25D the following new item:

Sec. 25E. Natural disaster mitigation property.

(c)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2011.