I

104TH CONGRESS

1ST SESSION H. R. 1857

To amend the Internal Revenue Code of 1986 to allow an individual who

has attained age 55 a deduction for amounts paid for insurance to

be used to pay real property taxes on the principal residence of the

individual after the individual has attained age 65.

IN THE HOUSE OF REPRESENTATIVES

JUNE 15, 1995

Mr. FRANKS of New Jersey introduced the following bill; which was referred

to the Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to allow an

individual who has attained age 55 a deduction for

amounts paid for insurance to be used to pay real property taxes on the principal residence of the individual

after the individual has attained age 65.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
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1 SECTION 1. DEDUCTION FOR INDIVIDUALS WHO HAVE AT2 TAINED AGE 55 FOR REAL PROPERTY TAX IN3 SURANCE WITH RESPECT TO PRINCIPAL RES4 IDENCE.

5 (a) IN GENERAL.—Part VII of subchapter B of chap6 ter 1 of the Internal Revenue Code of 1986 (relating to

7 additional itemized deductions for individuals) is amended

8 by redesignating section 220 as section 221 and by insert9 ing after section 219 the following new section:

10 ‘‘SEC. 220. DEDUCTION FOR INDIVIDUALS WHO HAVE AT11 TAINED AGE 55 FOR REAL PROPERTY TAX IN12 SURANCE WITH RESPECT TO PRINCIPAL RES13 IDENCE.

14 ‘‘(a) IN GENERAL.—In the case of an individual who

15 has attained age 55 before the close of the taxable year,

16 there shall be allowed as a deduction an amount equal to

17 the premiums paid or incurred during the taxable year for

18 any qualified real property tax insurance contract with re19 spect to the principal residence of such individual.

20 ‘‘(b) QUALIFIED REAL PROPERTY TAX INSURANCE

21 CONTRACT.—For purposes of this section—

22 ‘‘(1) IN GENERAL.—The term ‘qualified real

23 property tax insurance contract’ means any insur24 ance contract—

25 ‘‘(A) which permits premiums to be paid

26 for such insurance only after the policyholder
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1 attains age 55 and before the policyholder at2 tains age 65,

3 ‘‘(B) which pays, at the election of the pol4 icyholder—

5 ‘‘(i) the excess of—

6 ‘‘(I) the amount of the State and

7 local real property taxes imposed on

8 the principal residence of the policy9 holder for each real property tax year

10 in the insured period, over

11 ‘‘(II) the amount of such taxes

12 imposed on such residence for the last

13 real property tax year beginning be14 fore the insured period (or, if later,

15 the first real property tax year for

16 which the policyholder was liable for

17 such taxes imposed on such resi18 dence), or

19 ‘‘(ii) the amount of the State and

20 local real property taxes imposed on the

21 principal residence of the policyholder for

22 each real property tax year in the insured

23 period,
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1 ‘‘(C) which provides for a refund of the

2 cash value of the insurance contract (if any)

3 if—

4 ‘‘(i) the residence is sold or exchanged

5 before the end of the insured period, or

6 ‘‘(ii) the insured period ends by rea7 son of the last sentence of paragraph (2),

8 and

9 ‘‘(D) in the case of a husband and wife

10 who are joint policyholders, which provides for

11 a waiver of premiums for such insurance after

12 the death of either spouse.

13 ‘‘(2) INSURED PERIOD.—The term ‘insured pe14 riod’ means—

15 ‘‘(A) in the case of an election to have

16 paragraph (1)(B)(i) apply, the 10 real property

17 tax years beginning after the date the policy18 holder attains age 65, and

19 ‘‘(B) in the case of an election to have

20 paragraph (1)(B)(ii) apply, the number of real

21 property tax years (beginning after the date the

22 policyholder attains age 65) selected by the pol23 icyholder but only if the number selected is 5,

24 10, 15, or 20.
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1 In no event shall the insured period end after the

2 close of the real property tax year in which the last

3 policyholder dies.

4 ‘‘(3) PRINCIPAL RESIDENCE.—The term ‘prin5 cipal residence’ has the meaning given to such term

6 by section 1034.

7 ‘‘(4) STATE AND LOCAL REAL PROPERTY

8 TAXES.—The term ‘State and local real property

9 taxes’ means any real property tax which is a State

10 or local tax (within the meaning of section

11 164(b)(2)); except that such term shall not include

12 any amount for which a deduction is not allowable

13 by reason of section 164(c)(1).

14 ‘‘(c) PREMIUM REQUIREMENTS.—

15 ‘‘(1) IN GENERAL.—Except as provided in para16 graph (2), an insurance contract shall be treated as

17 a qualified real property tax insurance contract only

18 if the annual premium for any year does not exceed

19 the amount equal to 150 percent of the amount of

20 the State and local real property taxes imposed on

21 the principal residence of the policyholder for the

22 real property tax year ending during the preceding

23 year.
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1 ‘‘(2) SINGLE PREMIUMS PERMITTED IN CER2 TAIN CASES.—Paragraph (1) shall not apply to any

3 premium paid during any calendar year if—

4 ‘‘(A) not less than the amount of such pre5 mium is paid or distributed during such year to

6 the taxpayer from any individual retirement

7 plan of the taxpayer, or

8 ‘‘(B) the taxpayer receives during such

9 year a lump sum distribution (as defined in sec10 tion 402(d)(4)) in an amount not less than the

11 amount of such premium.

12 This paragraph shall not apply if the amount of any

13 premium paid, when added to premiums previously

14 paid, exceeds the amount reasonably necessary (as

15 determined under regulations prescribed by the Sec16 retary) to fund the payments referred to in sub17 section (b)(1)(B).

18 ‘‘(d) SPECIAL RULES FOR MARRIED INDIVIDUALS.—

19 For purposes of this section—

20 ‘‘(1) IN GENERAL.—In the case of a husband

21 and wife who are joint policyholders, this section

22 shall be applied by taking into account only the age

23 of the older spouse.

24 ‘‘(2) PROPERTY OF DECEASED SPOUSE.—If—
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1 ‘‘(A) an individual’s spouse died during the

2 period applicable under subsection (b)(1)(A),

3 ‘‘(B) such spouse was the older spouse,

4 and

5 ‘‘(C) any premium for any qualified real

6 property tax insurance contract was paid by ei7 ther spouse before the date of such death,

8 the age the older spouse would have been shall con9 tinue to be the only age taken into account for pur10 poses of this section.

11 ‘‘(e) OTHER SPECIAL RULES.—

12 ‘‘(1) TAX TREATMENT OF REFUND OF CASH

13 VALUE.—Any refund of the cash value of any quali14 fied real property tax insurance contract shall be in15 cludible in gross income for the taxable year in

16 which received.

17 ‘‘(2) DENIAL OF DEDUCTION FOR PAYMENT OF

18 TAXES.—No deduction shall be allowed under this

19 chapter for any payment of tax under any qualified

20 real property tax insurance contract.

21 ‘‘(3) TENANT-STOCKHOLDER IN COOPERATIVE

22 HOUSING CORPORATION.—A rule similar to the rule

23 of section 1034(f) shall apply for purposes of this

24 section.’’
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1 (b) DEDUCTION ALLOWED WHETHER OR NOT TAX2 PAYER ITEMIZES OTHER DEDUCTIONS.—Subsection (a)

3 of section 62 of such Code is amended by inserting after

4 paragraph (15) the following new paragraph:

5 ‘‘(16) QUALIFIED REAL PROPERTY TAX INSUR6 ANCE PREMIUMS.—The deduction allowed by section

7 220.’’

8 (c) CLERICAL AMENDMENT.—The table of sections

9 for part VII of subchapter B of chapter 1 of such Code

10 is amended by striking the last item and inserting the fol11 lowing new items:

‘‘Sec. 220. Deduction for individuals who have attained age 55 for

real property tax insurance with respect to principal

residence.

‘‘Sec. 221. Cross reference.’’

12 (d) EFFECTIVE DATE.—The amendments made by

13 this section shall apply to taxable years beginning after

14 the date of the enactment of this Act.

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