A bill to amend the Internal Revenue Code of 1986 to allow a refundable credit against income tax for the purchase of a principal residence by a first-time homebuyer.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``First-Time Homebuyers' Tax Credit 
Act of 2003''.

SEC. 2. REFUNDABLE CREDIT FOR FIRST-TIME HOMEBUYERS.

    (a) In General.--Subpart C of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to refundable credits) 
is amended by redesignating section 36 as section 37 and by inserting 
after section 35 the following new section:

``SEC. 36. 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 subtitle for the taxable year an amount equal to 10 
percent of the purchase price of the residence.
    ``(b) Limitations.--
            ``(1) Maximum dollar amount.--
                    ``(A) In general.--The credit allowed under 
                subsection (a) shall not exceed the excess (if any) 
                of--
                            ``(i) $3,000 ($6,000 in the case of a joint 
                        return), over
                            ``(ii) the credit transfer amount 
                        determined under subsection (c) with respect to 
                        the purchase to which subsection (a) applies.
                    ``(B) Inflation adjustment.--In the case of any 
                taxable year beginning after December 31, 2003--
                            ``(i) the $3,000 amount under subparagraph 
                        (A) shall be increased by an amount equal to 
                        $3,000, multiplied by the cost-of-living 
                        adjustment determined under section 1(f)(3) for 
                        the calendar year in which the taxable year 
                        begins by substituting `2002' for `1992' in 
                        subparagraph (B) thereof, and
                            ``(ii) the $6,000 amount under subparagraph 
                        (A) shall be increased to twice the $3,000 
                        amount, as adjusted under clause (i) for the 
                        taxable year.
                If the $3,000 amount as adjusted under clause (i) is 
                not a multiple of $10, such amount shall be rounded to 
                the nearest multiple of $10.
            ``(2) Taxable income limitation.--
                    ``(A) In general.--If the taxable income of the 
                taxpayer for any taxable year exceeds the maximum 
                taxable income in the table under subsection (a), (b), 
                (c), or (d) of section 1, whichever is applicable, to 
                which the 25 percent rate applies, the dollar amounts 
                in effect under paragraph (1)(A)(i) for such taxpayer 
                for the following taxable year shall be reduced (but 
                not below zero) by the amount of the excess.
                    ``(B) Change in return status.--In the case of 
                married individuals filing a joint return for any 
                taxable year who did not file such a joint return for 
                the preceding taxable year, subparagraph (A) shall be 
                applied by reference to the highest taxable income of 
                either such individual for the preceding taxable year.
    ``(c) Transfer of Credit.--
            ``(1) In general.--A taxpayer may transfer all or a portion 
        of the credit allowable under subsection (a) to 1 or more 
        persons as payment of any liability of the taxpayer arising out 
        of--
                    ``(A) the downpayment of any portion of the 
                purchase price of the principal residence, and
                    ``(B) closing costs in connection with the purchase 
                (including any points or other fees incurred in 
                financing the purchase).
            ``(2) Credit transfer mechanism.--
                    ``(A) In general.--Not less than 180 days after the 
                date of the enactment of this Act, the Secretary shall 
                establish and implement a credit transfer mechanism for 
                purposes of paragraph (1). Such mechanism shall require 
                the Secretary to--
                            ``(i) certify that the taxpayer is eligible 
                        to receive the credit provided by this section 
                        with respect to the purchase of a principal 
                        residence and that the transferee is eligible 
                        to receive the credit transfer,
                            ``(ii) certify that the taxpayer has not 
                        received the credit provided by this section 
                        with respect to the purchase of any other 
                        principal residence,
                            ``(iii) certify the credit transfer amount 
                        which will be paid to the transferee, and
                            ``(iv) require any transferee that directly 
                        receives the credit transfer amount from the 
                        Secretary to notify the taxpayer within 14 days 
                        of the receipt of such amount.
                Any check, certificate, or voucher issued by the 
                Secretary pursuant to this paragraph shall include the 
                taxpayer identification number of the taxpayer and the 
                address of the principal residence being purchased.
                    ``(B) Timely receipt.--The Secretary shall issue 
                the credit transfer amount not less than 30 days after 
the date of the receipt of an application for a credit transfer.
            ``(3) Payment of interest.--
                    ``(A) In general.--Notwithstanding any other 
                provision of this title, the Secretary shall pay 
                interest on any amount which is not paid to a person 
                during the 30-day period described in paragraph (2)(B).
                    ``(B) Amount of interest.--Interest under 
                subparagraph (A) shall be allowed and paid--
                            ``(i) from the day after the 30-day period 
                        described in paragraph (2)(B) to the date 
                        payment is made, and
                            ``(ii) at the overpayment rate established 
                        under section 6621.
                    ``(C) Exception.--This paragraph shall not apply to 
                failures to make payments as a result of any natural 
                disaster or other circumstance beyond the control of 
                the Secretary.
            ``(4) Effect on legal rights and obligations.--Nothing in 
        this subsection shall be construed to--
                    ``(A) require a lender to complete a loan 
                transaction before the credit transfer amount has been 
                transferred to the lender, or
                    ``(B) prevent a lender from altering the terms of a 
                loan (including the rate, points, fees, and other 
                costs) due to changes in market conditions or other 
                factors during the period of time between the 
                application by the taxpayer for a credit transfer and 
                the receipt by the lender of the credit transfer 
                amount.
    ``(d) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) First-time homebuyer.--
                    ``(A) In general.--The term `first-time homebuyer' 
                has the same meaning as when used in section 
                72(t)(8)(D)(i).
                    ``(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.
                    ``(C) Married individuals filing jointly.--In the 
                case of married individuals who file a joint return, 
                the credit under this section is allowable only if both 
                individuals are first-time homebuyers.
                    ``(D) Other taxpayers.--If 2 or more individuals 
                who are not married purchase a principal residence--
                            ``(i) the credit under this section is 
                        allowable only if each of the individuals is a 
                        first-time homebuyer, and
                            ``(ii) 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 the amount in 
                        effect under subsection (b)(1)(A) for 
                        individuals filing joint returns.
            ``(2) Principal residence.--The term `principal residence' 
        has the same meaning as when used in section 121. Except as 
        provided in regulations, an interest in a partnership, S 
        corporation, or trust which owns an interest in a residence 
        shall not be treated as an interest in a residence for purposes 
        of this paragraph.
            ``(3) Purchase.--
                    ``(A) In general.--The term `purchase' means any 
                acquisition, but only if--
                            ``(i) the property is not acquired from a 
                        person whose relationship to the person 
                        acquiring it 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 the 
                        individual's spouse, ancestors, and lineal 
                        descendants), 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.
            ``(4) Purchase price.--The term `purchase price' means the 
        adjusted basis of the principal residence on the date of 
        acquisition (within the meaning of section 72(t)(8)(D)(iii)).
    ``(e) Denial of Double Benefit.--No credit shall be allowed under 
subsection (a) for any expense for which a deduction or credit is 
allowed under any other provision of this chapter.
    ``(f) 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.
    ``(g) Property to Which Section Applies.--
            ``(1) In general.--The provisions of this section apply to 
        a principal residence if--
                    ``(A) the taxpayer purchases the residence on or 
                after January 1, 2003, and before January 1, 2010, or
                    ``(B) the taxpayer enters into, on or after January 
                1, 2003, and before January 1, 2010, a binding contract 
                to purchase the residence, and purchases and occupies 
                the residence before July 1, 2011.''.
    (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 
        (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 36, to the extent provided in 
        section 36(f).''.
            (2) Section 1324(b)(2) of title 31, United States Code, is 
        amended by striking ``or'' before ``enacted'' and by inserting 
        before the period at the end ``, or from section 36 of such 
        Code''.
    (c) Clerical Amendment.--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 striking the item relating to section 36 and 
inserting the following new items:

                              ``Sec. 36. Purchase of principal 
                                        residence by first-time 
                                        homebuyer.
                              ``Sec. 37. Overpayments of tax.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2002.

Summary: First-Time Homebuyers' Tax Credit Act of 2003 - Amends the Internal Revenue Code to: (1) allow an income-based, one-time tax credit for first-time homebuyers of ten percent of a principal residence's purchase price. (2) allow transfer of such credit as payment towards related downpayment and closing costs. And (3) apply the credit to purchases made on or after January 1, 2003, and before January 1, 2010, and to binding contracts made between such dates, and in which the residence is occupied before July 1, 2011.