BEAM Act of 2016

Summary: Boosting Equity for the American Middle Class Act of 2016 or the BEAM Act of 2016 This bill amends the Internal Revenue Code to allow a refundable tax credit equal to 50% of the excess home mortgage principal payments made by a taxpayer during the year.  The credit is limited to $500 per year and to taxpayers who have not received the credit for any of the 10 preceding years. The bill reduces the amount of the credit for taxpayers with modified adjusted gross incomes above specified levels. An &quot;excess home mortgage principal payment&quot; is the excess of: (1) the amount of principal paid by the taxpayer with respect to a mortgage during the year, over (2) the amount of principal the taxpayer would have paid by making each required payment on a timely basis under the terms of the mortgage (and no other payments).  The mortgage must: (1) be for a primary residence, (2) for a term between 15 and 30 years, and (3) require payments that are each the same amount and made in equal intervals during the term of the mortgage (or if any payment is required at a different interval, the amount of the payment is adjusted in the same proportion as the change in interval).  Married individuals must file a joint tax return to claim the credit. Persons engaged in a trade or business (e.g., lenders, mortgage companies, or banks) who are required to report mortgage interest payments from individuals of $600 or more must also report the amount of excess home mortgage principal payments received during the year. 

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Boosting Equity for the American 
Middle Class Act of 2016'' or as the ``BEAM Act of 2016''.

SEC. 2. REFUNDABLE CREDIT FOR EARLY PRINCIPAL PAYMENTS ON CERTAIN HOME 
              MORTGAGES.

    (a) In General.--Subpart C of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by inserting after 
section 36B the following new section:

``SEC. 36C. EARLY PRINCIPAL PAYMENTS ON CERTAIN HOME MORTGAGES.

    ``(a) In General.--In the case of an individual, there shall be 
allowed as a credit against the tax imposed by this subtitle for the 
taxable year an amount equal to 50 percent of the excess home mortgage 
principal payments made by the taxpayer during such taxable year.
    ``(b) Annual Dollar Limitation.--The credit allowed under 
subsection (a) with respect to any taxpayer for any taxable year shall 
not exceed $500.
    ``(c) Lifetime Limitation.--No credit shall be allowed under 
subsection (a) to any taxpayer for any taxable year if credit was 
allowed under subsection (a) to such taxpayer for any 10 preceding 
taxable years.
    ``(d) Limitation Based on Modified Adjusted Gross Income.--
            ``(1) In general.--The amount which would (but for this 
        paragraph and after the application of subsection (b)) be 
        allowable as a credit under subsection (a) shall be reduced 
        (but not below zero) by the amount which bears the same ratio 
        to the amount which would be so allowable as--
                    ``(A) the excess of--
                            ``(i) the taxpayer's modified adjusted 
                        gross income for the taxable year, over
                            ``(ii) $125,000 (twice such amount in the 
                        case of a joint return), bears to
                    ``(B) $10,000 (twice such amount in the case of a 
                joint return).
            ``(2) Modified adjusted gross income.--The term `modified 
        adjusted gross income' means adjusted gross income increased by 
        any amount excluded from gross income under section 911, 931, 
        or 933.
    ``(e) Excess Home Mortgage Principal Payments.--For purposes of 
this subsection--
            ``(1) In general.--The term `excess home mortgage principal 
        payments' means, with respect to qualified home mortgage 
        indebtedness for any taxable year, the excess of--
                    ``(A) the aggregate amount of principal paid by the 
                taxpayer with respect to such indebtedness during such 
                taxable year, over
                    ``(B) the aggregate amount of principal which would 
                have been paid by the taxpayer with respect to such 
                indebtedness during such taxable year if the taxpayer 
                had timely made each required payment under the terms 
                of the indebtedness during such taxable year (and no 
                other payments).
            ``(2) Qualified home mortgage indebtedness.--
                    ``(A) In general.--The term `qualified home 
                mortgage indebtedness' means any acquisition 
                indebtedness (as defined in section 163(h)(3)(B)) if--
                            ``(i) the residence with respect to such 
                        acquisition indebtedness is the primary 
                        residence (within the meaning of section 121) 
                        of the taxpayer, and
                            ``(ii) such indebtedness constitutes a 
                        traditional mortgage.
                    ``(B) Traditional mortgage.--For purposes of this 
                paragraph, the term `traditional mortgage' means 
                indebtedness--
                            ``(i) the term of which is not less than 15 
                        years and not more than 30 years, and
                            ``(ii) the required payments under which 
                        are each the same amount and made in equal 
                        intervals during the term of the indebtedness 
                        (or if any payment is required at a different 
                        interval, the amount of such payment is 
                        adjusted in the same proportion as the change 
                        in interval).
    ``(f) Rules Related to Joint Returns.--
            ``(1) No credit for married individuals filing 
        separately.--In the case of a married individual, no credit 
        shall be allowed under this section for any taxable year unless 
        such individual files a joint return with such individual's 
        spouse for such taxable year.
            ``(2) Application of lifetime limitation with respect to 
        joint returns.--If the credit under subsection (a) is allowed 
        with respect to a joint return for any taxable year, such 
        credit shall be treated for purposes of applying subsection (c) 
        as allowed to both spouses for such taxable year. For purposes 
        of applying subsection (c) with respect to a joint return for 
        any taxable year, the taxpayer shall be treated as having been 
        allowed the credit under subsection (a) for 10 or more 
        preceding taxable years only if both spouses have been so 
        allowed such credits.''.
    (b) Reporting of Excess Home Mortgage Principal Payments.--Section 
6050H(b)(2) of such Code is amended by striking ``and'' at the end of 
subparagraph (C), by redesignating subparagraph (D) as subparagraph 
(E), and by inserting after subparagraph (C) the following new 
subparagraph:
                    ``(D) the amount of excess home mortgage principal 
                payments (as defined in section 36C(e)) received with 
                respect to such mortgage during the calendar year, 
                and''.
    (c) Conforming Amendments.--
            (1) Section 6211(b)(4)(A) of such Code is amended by 
        inserting ``36C,'' after ``36B,''.
            (2) Section 1324(b)(2) of title 31, United States Code, is 
        amended by inserting ``36C,'' after ``36B,''.
            (3) 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 36B 
        the following new item:

``Sec. 36C. Early principal payments on certain home mortgages.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after the date of the enactment of this 
Act.