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.

Summary: Amends the Internal Revenue Code to allow a first-time homebuyer who purchases a principal residence a tax credit of ten percent of the purchase price of such residence. Limits the credit to $6,500. Requires married individuals filing jointly to both be first-time homebuyers. Makes this credit applicable to a principal residence only if the taxpayer enters into, on or after June 1, 2001, and before June 1, 2002, a binding contract to purchase the residence, and purchases and occupies the residence before January 1, 2003.

SECTION 1. 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 $6,500.
            ``(2) Limitation to one residence.--The credit under this 
        section shall be allowed with respect to only one residence of 
        the taxpayer.
            ``(3) 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.
            ``(4) 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 `$3,250' for `$6,500'.
            ``(5) Other taxpayers.--If 2 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 $6,500.
    ``(c) Definitions.--For purposes of this section--
            ``(1) First-time homebuyer.--
                    ``(A) In general.--The term `first-time homebuyer' 
                means any individual is such individual (and if 
                married, such individual's spouse) had no present 
                ownership interest in a principal residence in the 
                United States during the 3-year period ending on the 
                date of the purchase of the principal residence to 
                which this section applies.
                    ``(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.
            ``(2) Principal residence.--The term `principal residence' 
        has the same meaning as when used in section 121.
            ``(3) Purchase and purchase price.--The terms `purchase' 
        and `purchase price' have the meanings provided by section 
        1400C(e).
    ``(d) Carryforward of Unused Credit.--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), such excess 
shall be carried to the succeeding taxable year and added to the credit 
allowable under subsection (a) for such taxable year.
    ``(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) Denial of Double Benefit.--No credit shall be allowed under 
subsection (a) if the credit under section 1400C is allowed.
    ``(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) Property to Which Section Applies.--The provisions of this 
section apply to a principal residence if the taxpayer enters into, on 
or after June 1, 2001, and before June 1, 2002, a binding contract to 
purchase the residence, and purchases and occupies the residence before 
January 1, 2003.''.
    (b) Conforming Amendments.--
            (1) 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(g).''.
            (2) Subsection (c) of section 23 of such Code is amended by 
        striking ``section 1400C'' and inserting ``sections 25B and 
        1400C''.
            (3) Subparagraph (C) of section 25(e)(1) of such Code is 
        amended by striking ``sections 23 and'' and inserting 
        ``sections 23, 25B, and 1400C''.
            (4) Subsection (d) of section 1400C of such Code is amended 
        by inserting ``and section 25B'' after ``other than this 
        section''.
    (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 
apply to taxable years beginning after December 31, 2000.