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[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 3940 Introduced in Senate (IS)]

<DOC>

118th CONGRESS
  2d Session
                                S. 3940

To amend the Internal Revenue Code of 1986 to provide for a first-time 
               homebuyer credit, and for other purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                             March 14, 2024

 Mr. Whitehouse (for himself, Mr. Heinrich, Mr. Welch, Ms. Smith, Mr. 
Reed, Ms. Baldwin, and Ms. Rosen) introduced the following bill; which 
        was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL

 
To amend the Internal Revenue Code of 1986 to provide for a first-time 
               homebuyer credit, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``First-Time Homebuyer Tax Credit Act 
of 2024''.

SEC. 2. FIRST-TIME HOMEBUYER REFUNDABLE TAX CREDIT.

    (a) In General.--Section 36 of the Internal Revenue Code of 1986 is 
amended to read as follows:

``SEC. 36. FIRST-TIME HOMEBUYER CREDIT.

    ``(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 a taxable year, there shall be allowed as a credit against the 
tax imposed by this subtitle for such taxable year an amount equal to 
10 percent of the purchase price of the residence.
    ``(b) Limitations.--
            ``(1) Dollar limitation.--
                    ``(A) In general.--Except as otherwise provided in 
                this paragraph, the credit allowed under subsection (a) 
                shall not exceed $15,000.
                    ``(B) Married individuals filing separately.--In 
                the case of a married individual filing a separate 
                return, subparagraph (A) shall be applied by 
                substituting `$7,500' for `$15,000'.
                    ``(C) Other individuals.--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 $15,000.
            ``(2) Phaseout based on area median income.--
                    ``(A) In general.--The amount allowable as a credit 
                under subsection (a) (determined without regard to this 
                paragraph) shall be reduced (but not below zero) by the 
                amount which bears the same ratio to the amount which 
                is so allowable as--
                            ``(i) the excess (if any) of--
                                    ``(I) the modified adjusted gross 
                                income of the taxpayer for the taxable 
                                year, over
                                    ``(II) 150 percent of the 
                                applicable Area Medium Income, bears to
                            ``(ii) 20 percent of the applicable Area 
                        Median Income.
                    ``(B) Modified adjusted gross income.--For purposes 
                of subparagraph (A), the term `modified adjusted gross 
                income' means the adjusted gross income of the taxpayer 
                for the taxable year increased by any amount excluded 
                from gross income under section 911, 931, or 933.
                    ``(C) Applicable area median income.--For purposes 
                of subparagraph (A), the term `applicable Area Median 
                Income' means the Area Median Income set by the 
                Secretary of Housing and Urban Development with respect 
                to--
                            ``(i) the area in which the principal 
                        residence is located,
                            ``(ii) the size of the household of the 
                        taxpayer, and
                            ``(iii) the calendar year in which the 
                        principal residence is purchased.
                    ``(D) Regulations and guidance.--The Secretary, 
                after consultation with the Secretary of Housing and 
                Urban Development, shall issue such regulations and 
                guidance as are necessary to carry out the purposes of 
                this subparagraph.
            ``(3) Limitation based on area median purchase price.--
                    ``(A) In general.--The amount allowable as a credit 
                under subsection (a) (determined without regard to this 
                paragraph) shall be reduced (but not below zero) by the 
                amount which bears the same ratio to the amount which 
                is so allowable as--
                            ``(i) the excess (if any) of--
                                    ``(I) the purchase price of the 
                                principal residence, over
                                    ``(II) the amount which is equal to 
                                110 percent of the area median purchase 
                                price, bears to
                            ``(ii) the amount which is equal to 15 
                        percent of the area median purchase price.
                    ``(B) Area median purchase price.--For purposes of 
                this paragraph, the term `area median purchase price' 
                means the median purchase price for a home in both the 
                area and the calendar year in which the purchase of the 
                principal residence takes place.
                    ``(C) Regulations and guidance.--The Secretary, 
                after consultation with the Secretary of Housing and 
                Urban Development, shall promulgate such regulations 
                and guidance as are necessary to carry out the purposes 
                of this subparagraph, including for determining the 
                area median purchase price with respect to different 
                localities.
            ``(4) Inflation adjustment.--In the case of any taxable 
        year beginning in a calendar year after 2024, each of the 
        dollar amounts in paragraph (1) shall be increased by an amount 
        equal to--
                    ``(A) such dollar amount, multiplied by
                    ``(B) the cost-of-living adjustment determined 
                under section 1(f)(3) for the calendar year in which 
                the taxable year begins, determined by substituting 
                `calendar year 2023' for `calendar year 2016' in 
                subparagraph (A)(ii) thereof.
        Any increase determined under the preceding sentence shall be 
        rounded to the nearest multiple of $100.
            ``(5) Age limitation.--No credit shall be allowed under 
        subsection (a) with respect to the purchase of any residence 
        unless the taxpayer has attained age 18 as of the date of such 
        purchase. In the case of any taxpayer who is married (within 
        the meaning of section 7703), the taxpayer shall be treated as 
        meeting the age requirement of the preceding sentence if the 
        taxpayer or the taxpayer's spouse meets such age requirement.
    ``(c) Definitions.--For purposes of this section--
            ``(1) First-time homebuyer.--The term `first-time 
        homebuyer' means any individual if such individual (and if 
        married, such individual's spouse)--
                    ``(A) has no present ownership interest in any 
                residence during the 3-year period ending on the date 
                of the purchase of the principal residence to which 
                this section applies, and
                    ``(B) has not taken the credit in any other taxable 
                year.
            ``(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 such 
                        property (or, if married, such individual's 
                        spouse),
                            ``(ii) the acquisition is financed through 
                        a federally backed mortgage loan (as defined in 
                        section 4022 of the CARES Act), and
                            ``(iii) the basis of the property in the 
                        hands of the person acquiring such property 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).
    ``(d) 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) 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,
            ``(2) a deduction under section 151 with respect to such 
        taxpayer is allowable to another taxpayer for such taxable 
        year, or
            ``(3) the taxpayer fails to attach to the return of tax for 
        such taxable year a properly executed copy of the settlement 
        statement used to complete such purchase.
    ``(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) shall not apply.
    ``(f) Recapture of Credit.--
            ``(1) In general.--Except as otherwise provided in this 
        subsection, if, during any taxable year before the close of the 
        recapture period, a taxpayer disposes of the principal 
        residence with respect to which a credit was allowed under 
        subsection (a) (or such residence ceases to be the principal 
        residence of the taxpayer), the tax imposed by this chapter for 
        such taxable year shall be increased by the recoverable amount 
        determined in paragraph (2).
            ``(2) Recoverable amount.--For purposes of paragraph (1), 
        the recoverable amount is the product of--
                    ``(A) 25 percent of the amount of the credit 
                allowed under subsection (a), multiplied by
                    ``(B) the number of taxable years remaining in the 
                recapture period as of the beginning of the taxable 
                year in which the taxpayer disposes of the principal 
                residence.
            ``(3) Limitation based on gain.--In the case of the sale of 
        the principal residence to a person who is not related to the 
        taxpayer, the increase in tax determined under paragraph (1) 
        shall not exceed the amount of gain (if any) on such sale. 
        Solely for purposes of the preceding sentence, the adjusted 
        basis of such residence shall be reduced by the amount of the 
        credit allowed under subsection (a).
            ``(4) Exceptions.--
                    ``(A) Death of a taxpayer.--Paragraph (1) shall not 
                apply to any taxable year ending after the date of the 
                taxpayer's death.
                    ``(B) Involuntary conversion.--Paragraph (1) shall 
                not apply in the case of a residence which is 
                compulsorily or involuntarily converted (within the 
                meaning of section 1033(a)) if the taxpayer acquires a 
                new principal residence during the 2-year period 
                beginning on the date of the disposition or cessation 
                referred to in paragraph (1). Paragraph (1) shall apply 
                to such new principal residence during the recapture 
                period in the same manner as if such new principal 
                residence were the converted residence.
                    ``(C) Transfers between spouses or incident to 
                divorce.--In the case of a transfer of a residence to 
                which section 1041(a) applies--
                            ``(i) paragraph (1) shall not apply to such 
                        transfer, and
                            ``(ii) in the case of taxable years ending 
                        after such transfer, paragraph (1) shall apply 
                        to the transferee in the same manner as if such 
                        transferee were the transferor (and shall not 
                        apply to the transferor).
                    ``(D) Special rule for members of the armed forces, 
                etc.--
                            ``(i) In general.--In the case of the 
                        disposition of a principal residence by an 
                        individual (or a cessation referred to in 
                        paragraph (1)) after December 31, 2021, in 
                        connection with Government orders received by 
                        such individual, or such individual's spouse, 
                        for qualified official extended duty service, 
                        paragraph (1) and subsection (d)(2) shall not 
                        apply to such disposition (or cessation).
                            ``(ii) Qualified official extended duty 
                        service.--For purposes of this section, the 
                        term `qualified official extended duty service' 
                        means service on qualified official extended 
                        duty as--
                                    ``(I) a member of the uniformed 
                                services,
                                    ``(II) a member of the Foreign 
                                Service of the United States, or
                                    ``(III) an employee of the 
                                intelligence community.
                            ``(iii) Definitions.--Any term used in this 
                        subparagraph which is also used in paragraph 
                        (9) of section 121(d) shall have the same 
                        meaning as when used in such paragraph.
                    ``(E) Disposition of residence in connection with 
                change of employment.--In the case of the disposition 
                of a principal residence by an individual (or a 
                cessation referred to in paragraph (1)) after December 
                31, 2021 in connection with a change of employment 
                which meets the conditions described in section 217(c), 
                paragraph (1) shall not apply to such disposition (or 
                cessation).
            ``(5) Joint returns.--In the case of a credit allowed under 
        subsection (a) with respect to a joint return, half of such 
        credit shall be treated as having been allowed to each 
        individual filing such return for purposes of this subsection.
            ``(6) Return requirement.--If the tax imposed by this 
        chapter for the taxable year is increased under this 
        subsection, the taxpayer shall, notwithstanding section 6012, 
        be required to file a return with respect to the taxes imposed 
        under this subtitle.
            ``(7) Recapture period.--For purposes of this subsection, 
        the term `recapture period' means the 4 taxable years beginning 
        with the taxable year in which the purchase of the principal 
        residence for which a credit is allowed under subsection (a) 
        was made.
    ``(g) Election To Treat Purchase in Prior Year.--In the case of a 
purchase of a principal residence after December 31, 2022, a taxpayer 
may elect to treat such purchase as made on December 31 of the calendar 
year preceding such purchase for purposes of this section (other than 
subsections (b)(4), (c), and (h)).
    ``(h) Transfer of Credit.--
            ``(1) In general.--Subject to such regulations and other 
        guidance as the Secretary determines necessary, a taxpayer may 
        elect that the credit which would (but for this subsection) be 
        allowed to such taxpayer with respect to the purchase of a 
        principal residence shall be allowed to the mortgage lender 
        with respect to such purchase and not to such taxpayer.
            ``(2) Eligible entity.--For purposes of this subsection, 
        the term `eligible entity' means, with respect to the purchase 
        of the principal residence for which the credit is allowed 
        under subsection (a), the mortgage lender which provides the 
        mortgage to the taxpayer and has--
                    ``(A) registered with the Secretary for purposes of 
                this paragraph, at such time, and in such form and 
                manner, as the Secretary may prescribe,
                    ``(B) prior to the election described in paragraph 
                (1) and not later than at the time of such purchase, 
                disclosed to the taxpayer making such purchase--
                            ``(i) the value of the credit allowed under 
                        subsection (a), and
                            ``(ii) the amount provided by the mortgage 
                        lender to such taxpayer as a condition of the 
                        election described in paragraph (1).
                    ``(C) not later than at the time of such purchase, 
                made payment to such taxpayer (whether in cash or in 
                the form of a partial payment or down payment for the 
                purchase of such principal residence) in an amount 
                equal to the credit otherwise allowable to such 
                taxpayer, and
                    ``(D) with respect to any incentive otherwise 
                available for taking a mortgage for which a credit is 
                allowed under this section, including any incentive in 
                the form of a rebate or discount provided by the 
                mortgage lender, ensured that--
                            ``(i) the availability or use of such 
                        incentive shall not limit the ability of a 
                        taxpayer to make an election described in 
                        paragraph (1), and
                            ``(ii) such election shall not limit the 
                        value or use of such incentive.
            ``(3) Timing.--An election described in paragraph (1) shall 
        be made by the taxpayer not later than the date on which the 
        purchase of the principal residence with respect to which the 
        credit under subsection (a) is allowed is made.
            ``(4) Revocation of registration.--Upon determination by 
        the Secretary that a mortgage lender has failed to comply with 
        the requirements described in paragraph (2), the Secretary may 
        revoke the registration (as described in subparagraph (A) of 
        such paragraph) of such mortgage lender.
            ``(5) Tax treatment of payments.--With respect to any 
        payment described in paragraph (2)(C), such payment--
                    ``(A) shall not be includible in the gross income 
                of the taxpayer, and
                    ``(B) with respect to the mortgage lender, shall 
                not be deductible under this title.
            ``(6) Advance payment to mortgage lenders.--
                    ``(A) In general.--The Secretary shall establish a 
                program to make advance payments to any eligible entity 
                in an amount equal to the cumulative amount of the 
                credits allowed under subsection (a) with respect to 
                any mortgages issued by such entity for which an 
                election described in paragraph (1) has been made.
                    ``(B) Excessive payments.--Rules similar to the 
                rules of section 6417(d)(6) shall apply for purposes of 
                this paragraph.
                    ``(C) Treatment of advance payments.--For purposes 
                of section 1324 of title 31, United States Code, the 
                payments under subparagraph (A) shall be treated in the 
                same manner as a refund due from a credit provision 
                referred to in subsection (b)(2) of such section.
            ``(7) Recapture.--In the case of any taxpayer who has made 
        an election described in paragraph (1) with respect to the 
        purchase of a principal residence and received a payment 
        described in paragraph (2)(C) from an eligible entity, such 
        principal residence shall be treated as a principal residence 
        with respect to which a credit was allowed under subsection (a) 
        for purposes of subsection (f).''.
    (b) Certain Errors With Respect to First-time Homebuyer Tax Credit 
Treated as Mathematical or Clerical Errors.--Paragraph (2) of section 
6213(g) of the Internal Revenue Code of 1986 is amended by striking 
``and'' at the end of subparagraph (U), by striking the period at the 
end of subparagraph (V) and inserting ``, and'', and by inserting after 
subparagraph (V) the following new subparagraph:
                    ``(W) an entry on a return claiming the credit 
                under section 36 if--
                            ``(i) the Secretary obtains information 
                        from the person issuing the TIN of the taxpayer 
                        that indicates that the taxpayer does not meet 
                        the age requirement of section 36(b)(4),
                            ``(ii) information provided to the 
                        Secretary by the taxpayer on an income tax 
                        return for at least one of the 2 preceding 
                        taxable years is inconsistent with eligibility 
                        for such credit, or
                            ``(iii) the taxpayer fails to attach to the 
                        return the form described in section 
                        36(d)(3).''.
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to principal residences purchased after the date of 
the enactment of this Act.
                                 <all>
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