To amend the Internal Revenue Code of 1986 to provide a Federal income tax credit for certain home purchases.

Summary: Amends the Internal Revenue Code to allow individual taxpayers a one-time refundable tax credit for up to 10% of the purchase price of a principal residence purchased in the United States within the 12-month period beginning on the date of enactment of this Act. Limits the dollar amount of such credit to $10,000. Terminates such credit after 2009.

SECTION 1. CREDIT FOR CERTAIN HOME PURCHASES.

    (a) Allowance of Credit.--Subpart A 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 25D the following new 
section:

``SEC. 25E. CREDIT FOR CERTAIN HOME PURCHASES.

    ``(a) Allowance of Credit.--In the case of an individual who 
purchases a principal residence in the United States during the 12-
month period beginning on the date of the enactment of this section, 
there shall be allowed to the taxpayer 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) Dollar limitation.--The credit allowed under 
        subsection (a) shall not exceed $10,000.
            ``(2) Denial of credit for residences acquired with 
        nonconforming loans.--No credit shall be allowed under 
        subsection (a) with respect to the purchase of any residence if 
        the aggregate acquisition indebtedness (as defined in section 
        163(h)(3)(B)) with respect to such residence exceeds the 
        limitation on the maximum original principal obligation of a 
        mortgage that may be purchased by the Federal Home Loan 
        Mortgage Corporation (as such limitation is in effect at the 
        time of such purchase).
            ``(3) 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--
                    ``(A) the sum of the regular tax liability (as 
                defined in section 26(b)) plus the tax imposed by 
                section 55, over
                    ``(B) the sum of the credits allowable under this 
                subpart (other than this section) for the taxable year.
            ``(4) One-time only.--
                    ``(A) In general.--If a credit is allowed under 
                this section in the case of any individual (and such 
                individual's spouse, if married) with respect to the 
                purchase of any principal residence, no credit shall be 
                allowed under this section in any taxable year with 
                respect to the purchase of any other principal 
                residence by such individual or a spouse of such 
                individual.
                    ``(B) Joint purchase.--In the case of a purchase of 
                a principal residence by 2 or more unmarried 
                individuals or by 2 married individuals filing 
                separately, no credit shall be allowed under this 
                section if a credit under this section has been allowed 
                to any of such individuals in any taxable year with 
                respect to the purchase of any other principal 
                residence.
    ``(c) Carryforward of Unused Credit.--
            ``(1) Rule for years in which all personal credits allowed 
        against regular and alternative minimum tax.--In the case of a 
        taxable year to which section 26(a)(2) applies, if the credit 
        allowable under subsection (a) exceeds the limitation imposed 
        by section 26(a)(2) 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 succeeding taxable year.
            ``(2) Rule for other years.--In the case of a taxable year 
        to which section 26(a)(2) does not apply, if the credit 
        allowable under subsection (a) exceeds the limitation imposed 
        by subsection (b)(3) for such taxable year, such excess shall 
        be carried to the succeeding taxable year and added to the 
        credit allowable under subsection (a) for such succeeding 
        taxable year.
            ``(3) Limitation.--No credit may be carried forward under 
        this subsection to any taxable year following the first taxable 
        year after the taxable year in which the credit arose.
    ``(d) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Allocation of dollar limit.--
                    ``(A) Married individuals filing separately.--In 
                the case of a married individual filing a separate 
                return, subsection (b)(1) shall be applied by 
                substituting `$5,000' for `$10,000'.
                    ``(B) Other individuals.--If two 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 
                $10,000.
            ``(2) Principal residence.--The term `principal residence' 
        has the same meaning as when used in section 121.
            ``(3) Purchase.--
                    ``(A) In general.--The term `purchase' means any 
                acquisition, but only if--
                            ``(i) the property is not acquired from a 
                        person related to the person acquiring it, 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 on the date the taxpayer 
                first occupies such residence.
            ``(4) Purchase price.--The term `purchase price' means the 
        adjusted basis of the principal residence on the date such 
        residence is purchased.
            ``(5) Related persons.--A person shall be treated as 
        related to another person if the relationship between such 
        persons 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 his spouse, ancestors, and lineal 
        descendants).
    ``(e) Exceptions.--No credit under subsection (a) shall be allowed 
to any taxpayer for any taxable year with respect to the purchase of a 
residence if--
            ``(1) a credit under section 1400C (relating to first-time 
        homebuyer in the District of Columbia) is allowable to the 
        taxpayer (or the taxpayer's spouse) for such taxable year or 
        any prior taxable year,
            ``(2) the taxpayer is a nonresident alien, or
            ``(3) the taxpayer disposes of such residence (or such 
        residence ceases to be the principal residence of the taxpayer 
        (and, if married, the taxpayer's spouse)) before the close of 
        such taxable year.
    ``(f) Reporting Requirement.--Rules similar to the rules of section 
1400C(f) (as so in effect) shall apply.
    ``(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) Application.--This section shall not apply to any taxable 
year beginning after December 31, 2009.''.
    (b) Conforming Amendments.--
            (1) Section 23(c)(1) of such Code is amended by striking 
        ``25D and 1400C'' and inserting ``25D, 25E, and 1400C''.
            (2) Section 25D(c)(2) of such Code is amended by striking 
        ``and 25B'' and inserting ``25B, and 25E''.
            (3) Section 1400C(d)(1) of such Code is amended by striking 
        ``section 25D'' and inserting ``sections 25D and 25E''.
    (c) Clerical Amendment.--The table of sections for subpart A 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 25D the 
following new item:

``Sec. 25E. Credit for certain home purchases.''.
    (d) Effective Date.--The amendments made by this section shall 
apply with respect to residences purchased after the date of the 
enactment of this Act in taxable years ending after such date.