I

103D CONGRESS

1ST SESSION H. R. 60

To amend the Internal Revenue Code of 1986 to allow a credit for the

purchase of principal residence by a first-time homebuyer.

IN THE HOUSE OF REPRESENTATIVES

JANUARY 5, 1993

Mr. BEREUTER 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 a

credit for the purchase of principal residence by a firsttime homebuyer.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. CREDIT FOR PURCHASE OF PRINCIPAL RESI4 DENCE BY FIRST-TIME HOMEBUYER.

5 (a) IN GENERAL.—Subpart A of part IV of sub6 chapter A of chapter 1 of the Internal Revenue Code of

7 1986 (relating to nonrefundable personal credits) is

8 amended by inserting after section 22 the following new

9 section:
2

•HR 60 IH

1 ‘‘SEC. 23. PURCHASE OF PRINCIPAL RESIDENCE BY FIRST2 TIME HOMEBUYER.

3 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of a first4 time homebuyer, there shall be allowed as a credit against

5 the tax imposed by this chapter an amount equal to 10

6 percent of the purchase price of the first principal resi7 dence purchased by the taxpayer during the eligibility pe8 riod. Except as otherwise provided in this section, such

9 credit shall be allowed for the taxable year in which such

10 residence is purchased.

11 ‘‘(b) LIMITATION.—The credit allowed by subsection

12 (a) to the taxpayer shall not exceed $2,500.

13 ‘‘(c) FIRST-TIME HOMEBUYER.—For purposes of

14 this section—

15 ‘‘(1) IN GENERAL.—The term ‘first-time home16 buyer’ means any individual unless such individual

17 or such individual’s spouse had a present ownership

18 interest in any principal residence at any time dur19 ing the 3-year period ending on the date of the pur20 chase of the residence referred to in subsection (a).

21 ‘‘(2) UNMARRIED JOINT OWNERS.—An individ22 ual shall not be treated as a first-time homebuyer

23 with respect to any residence unless all the individ24 uals purchasing such residence with such individual

25 are first-time homebuyers.
3

•HR 60 IH

1 ‘‘(3) ALLOCATION OF LIMITS.—All individuals

2 purchasing a residence shall be treated as 1 individ3 ual for purposes of determining the maximum credit

4 under subsection (a), and such maximum credit shall

5 be allocated among such individuals under regula6 tions prescribed by the Secretary.

7 ‘‘(4) CERTAIN INDIVIDUALS INELIGIBLE.—The

8 term ‘first-time homebuyer’ shall not include any in9 dividual if, on the date of the purchase of the resi10 dence, the period of time specified in section 1034(a)

11 is suspended under subsection (a)(6), (h), or (k) of

12 section 1034 with respect to such individual.

13 ‘‘(5) SPECIAL RULE FOR CERTAIN CONTRACTS

14 OF DEED.—In the case of an individual described in

15 section 143(i)(1)(C) for any year, an ownership in16 terest shall not include a contract of deed described

17 in such section.

18 ‘‘(d) OTHER DEFINITIONS.—For purposes of this

19 section—

20 ‘‘(1) ELIGIBILITY PERIOD.—

21 ‘‘(A) IN GENERAL.—The term ‘eligibility

22 period’ means the 1-year period beginning on

23 the date of the enactment of this section.
4

•HR 60 IH

1 ‘‘(B) BINDING CONTRACTS.—A residence

2 shall be treated as purchased during the eligi3 bility period if—

4 ‘‘(i) during the eligibility period, the

5 purchaser enters into a binding contract to

6 purchase the residence, and

7 ‘‘(ii) the purchaser purchases and oc8 cupies the residence on or before the date

9 3 months after the last day of the eligi10 bility period.

11 For purposes of clause (i), a contract shall not

12 fail to be treated as binding merely because it

13 is contingent on financing or on the condition

14 of the residence.

15 ‘‘(2) PURCHASE.—The term ‘purchase’ means

16 any acquisition of property, but only if—

17 ‘‘(A) the property is not acquired from a

18 person whose relationship to the person acquir19 ing it would result in the disallowance of losses

20 under section 267 or 707(b), and

21 ‘‘(B) the basis of the property in the hands

22 of the person acquiring it is not determined—

23 ‘‘(i) in whole or in part by reference

24 to the adjusted basis of such property in
5

•HR 60 IH

1 the hands of the person from whom ac2 quired, or

3 ‘‘(ii) under section 1014(a) (relating

4 to property acquired from a decedent).

5 ‘‘(3) PRINCIPAL RESIDENCE.—The term ‘prin6 cipal residence’ has the same meaning as when used

7 in section 1034.

8 ‘‘(4) PURCHASE PRICE.—The term ‘purchase

9 price’ means the adjusted basis of the residence on

10 the date of its acquisition.

11 ‘‘(e) CARRYOVER OF UNUSED CREDIT.—

12 ‘‘(1) IN GENERAL.—If—

13 ‘‘(A) the credit allowable under subsection

14 (a) exceeds

15 ‘‘(B) the limitation imposed by section

16 26(a) reduced by the sum of the credits allow17 able under sections 21 and 22,

18 such excess shall be carried to the succeeding tax19 able year and shall be allowable under subsection (a)

20 for such succeeding taxable year.

21 ‘‘(2) 5-YEAR LIMIT ON CARRYFORWARD.—No

22 amount may be carried under paragraph (1) to any

23 taxable year after the 5th taxable year after the tax24 able year in which the residence is purchased.
6

•HR 60 IH

1 ‘‘(f) RECAPTURE OF CREDIT FOR CERTAIN DISPOSI2 TIONS.—

3 ‘‘(1) IN GENERAL.—Except as provided in para4 graphs (2) and (3), if the taxpayer disposes of prop5 erty with respect to the purchase of which a credit

6 was allowed under subsection (a) and such disposi7 tion occurs at any time within 36 months after the

8 date the taxpayer acquired the property as his prin9 cipal residence, then the tax imposed under this

10 chapter for the taxable year in which the disposition

11 occurs is increased by an amount equal to the

12 amount allowed as a credit for the purchase of such

13 property.

14 ‘‘(2) ACQUISITION OF NEW RESIDENCE.—If, in

15 connection with a disposition described in paragraph

16 (1) and within the applicable period prescribed in

17 section 1034, the taxpayer purchases a new principal

18 residence, then paragraph (1) shall not apply and

19 the tax imposed by this chapter for the taxable year

20 in which the new principal residence is purchased is

21 increased to the extent the amount of the credit that

22 could be claimed under this section on the purchase

23 of the new residence (were such residence the first

24 residence purchased during the eligibility period) is
7

•HR 60 IH

1 less than the amount of credit claimed by the tax2 payer under this section.

3 ‘‘(3) DEATH OF OWNER; CASUALTY LOSS; IN4 VOLUNTARY CONVERSION; ETC.—Paragraph (1)

5 shall not apply to—

6 ‘‘(A) a disposition of a residence made on

7 account of the death of any individual having a

8 legal or equitable interest therein occurring dur9 ing the 36-month period referred to in para10 graph (1),

11 ‘‘(B) a disposition of the old residence if it

12 is substantially or completely destroyed by a

13 casualty described in section 165(c)(3) or

14 compulsorily or involuntarily converted (within

15 the meaning of section 1033(a)), or

16 ‘‘(C) a disposition pursuant to a settlement

17 in a divorce or legal separation proceeding

18 where the residence is sold or the other spouse

19 retains the residence as a principal residence.’’

20 (b) CLERICAL AMENDMENT.—The table of sections

21 for subpart A of part IV of subchapter A of chapter 1

22 of such Code is amended by inserting after the item relat23 ing to section 22 the following new item:

‘‘Sec. 23. Purchase of principal residence by first-time homebuyer.’’
8

•HR 60 IH

1 (c) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to taxable years ending after the

3 date of the enactment of this Act.

Æ