A bill 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 September 1, 2001, and before September 1, 2002, a binding contract to purchase the residence, and purchases and occupies the residence before April 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 before section 26 the 
following new section:

``SEC. 25C. 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 and sections 23, 
24, 25, 25B, and 1400C) and section 27, 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 September 1, 2001, and before September 1, 2002, a binding 
contract to purchase the residence, and purchases and occupies the 
residence before April 1, 2003.''.
    (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 
        (26), by striking the period at the end of paragraph (27) and 
        inserting ``, and'', and by adding at the end the following new 
        paragraph:
            ``(28) in the case of a residence with respect to which a 
        credit was allowed under section 25C, to the extent provided in 
        section 25C(g).''.
            (2) Subsection (a) of section 1016 of the Internal Revenue 
        Code of 1986 (relating to general rule for adjustments to 
        basis), as amended by section 205(b)(3) of the Economic Growth 
        and Tax Relief Reconciliation Act of 2001, is amended by 
        striking ``and'' at the end of paragraph (27), by striking the 
        period at the end of paragraph (28) and inserting ``, and'', 
        and by adding at the end the following new paragraph:
            ``(29) in the case of a residence with respect to which a 
        credit was allowed under section 25C, to the extent provided in 
        section 25C(g).''.
            (3) Section 23(b)(4)(B) of such Code, as added by section 
        202(f)(1) of the Economic Growth and Tax Relief Reconciliation 
        Act of 2001, is amended by inserting ``and section 25C'' after 
        ``this section''.
            (4) Section 24(b)(3)(B) of such Code, as added and amended 
        by the Economic Growth and Tax Relief Reconciliation Act of 
        2001, is amended by striking ``23 and 25B'' and inserting ``23, 
        25B, and 25C''.
            (5) Section 25(e)(1)(C) of such Code is amended by striking 
        ``23 and 1400C'' and by inserting ``23, 25C, and 1400C''.
            (6) Section 25(e)(1)(C) of such Code, as amended by the 
        Economic Growth and Tax Relief Reconciliation Act of 2001, is 
        amended by inserting ``25C,'' after ``25B,''.
            (7) Section 25B of such Code, as added by section 618(a) of 
        the Economic Growth and Tax Relief Reconciliation Act of 2001, 
        is amended by striking ``section 23'' and inserting ``sections 
        23 and 25C''.
            (8) Section 1400C(d) of such Code is amended by inserting 
        ``and section 25C'' after ``this section''.
            (9) Section 1400C(d) of such Code, as amended by the 
        Economic Growth and Tax Relief Reconciliation Act of 2001, is 
        amended by striking ``and 25B'' and inserting ``25B, and 25C''.
            (10) The table of sections for subpart A of part IV of 
        subchapter A of chapter 1 of such Code is amended by inserting 
        before the item relating to section 26 the following new item:

                              ``Sec. 25C. Purchase of principal 
                                        residence by first-time 
                                        homebuyer.''.
    (c) Effective Dates.--
            (1) In general.--The amendments made by subsections (a) and 
        (b)(10) shall apply to taxable years beginning after December 
        31, 2000.
            (2) Temporary conforming amendments.--The amendments made 
        by paragraphs (1), (5), and (8) of subsection (b) shall apply 
        to taxable years beginning after December 31, 2000, and before 
        January 1, 2002.
            (3) Permanent conforming amendments.--The amendments made 
        by paragraphs (2), (3), (4), (6), (7), and (9) of subsection 
        (b) shall apply to taxable years beginning after December 31, 
        2001.