I

103D CONGRESS

1ST SESSION H. R. 402

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

income tax for the purchase of a principal residence by a first-time

homebuyer.

IN THE HOUSE OF REPRESENTATIVES

JANUARY 5, 1993

Mr. SOLOMON 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 against income tax for the purchase of a principal

residence by a first-time 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 FIRST-TIME HOMEBUYERS.

4 (a) IN GENERAL.—Subpart A of part IV of sub5 chapter A of chapter 1 of the Internal Revenue Code of

6 1986 (relating to nonrefundable personal credits) is

7 amended by inserting after section 22 the following new

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

3 ‘‘(a) ALLOWANCE OF CREDIT.—If an individual who

4 is a first-time homebuyer purchases a principal residence

5 (within the meaning of section 1034), there shall be al6 lowed to such individual as a credit against the tax im7 posed by this subtitle an amount equal to 10 percent of

8 the purchase price of the principal residence.

9 ‘‘(b) LIMITATIONS.—

10 ‘‘(1) MAXIMUM CREDIT.—The credit allowed

11 under subsection (a) shall not exceed $5,000.

12 ‘‘(2) LIMITATION TO ONE RESIDENCE.—The

13 credit under this section shall be allowed with re14 spect to only one residence of the taxpayer.

15 ‘‘(3) MARRIED INDIVIDUALS FILING JOINTLY.—

16 In the case of a husband and wife who file a joint

17 return under section 6013, the credit under this sec18 tion is allowable only if both the husband and wife

19 are first-time homebuyers, and the amount specified

20 under paragraph (1) shall apply to the joint return.

21 ‘‘(4) OTHER TAXPAYERS.—In the case of indi22 viduals to whom paragraph (3) does not apply who

23 together purchase the same new principal residence

24 for use as their principal residence, the credit under

25 this section is allowable only if each of the individ26 uals is a first-time homebuyer, and the sum of the
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1 amount of credit allowed to such individuals shall

2 not exceed the lesser of $5,000 or 10 percent of the

3 total purchase price of the residence. The amount of

4 any credit allowable under this section shall be ap5 portioned among such individuals under regulations

6 to be prescribed by the Secretary.

7 ‘‘(5) APPLICATION WITH OTHER CREDITS.—

8 ‘‘(A) GENERAL RULE.—The credit allowed

9 by subsection (a) for any taxable year shall not

10 exceed the amount of the tax imposed by this

11 chapter for the taxable year, reduced by the

12 sum of any other credits allowable under this

13 chapter.

14 ‘‘(B) CARRYFORWARD OF UNUSED CRED15 ITS.—Any credit that is not allowed for the tax16 able year solely by reason of subparagraph (A)

17 shall be carried forward to the succeeding tax18 able year and allowed as a credit for that tax19 able year. However, the credit shall not be car20 ried forward more than 5 taxable years after

21 the taxable year in which the residence is pur22 chased.

23 ‘‘(6) YEAR FOR WHICH CREDIT ALLOWED.—

24 Fifty percent of the credit allowed by subsection (a)

25 shall be allowed in the taxable year in which the res-
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1 idence is purchased and the remaining fifty percent

2 of the credit shall be allowed in the succeeding tax3 able year.

4 ‘‘(c) DEFINITIONS AND SPECIAL RULES.—For pur5 poses of this section—

6 ‘‘(1) PURCHASE PRICE.—The term ‘purchase

7 price’ means the adjusted basis of the principal resi8 dence on the date of the acquisition thereof.

9 ‘‘(2) FIRST-TIME HOMEBUYER.—

10 ‘‘(A) IN GENERAL.—The term ‘first-time

11 homebuyer’ means any individual if such indi12 vidual has not had a present ownership interest

13 in any residence (including an interest in a

14 housing cooperative) at any time within the 36-

15 month period ending on the date of acquisition

16 of the residence on which the credit allowed

17 under subsection (a) is to be claimed. An inter18 est in a partnership, S corporation, or trust

19 that owns an interest in a residence is not con20 sidered an interest in a residence for purposes

21 of this paragraph except as may be provided in

22 regulations.

23 ‘‘(B) CERTAIN INDIVIDUALS.—Notwith24 standing subparagraph (A), an individual is not

25 a first-time homebuyer on the date of purchase
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1 of a residence if on that date the running of

2 any period of time specified in section 1034 is

3 suspended under subsection (h) or (k) of sec4 tion 1034 with respect to that individual.

5 ‘‘(3) SPECIAL RULES FOR CERTAIN ACQUISI6 TIONS.—No credit is allowable under this section

7 if—

8 ‘‘(A) the residence is acquired from a per9 son whose relationship to the person acquiring

10 it would result in the disallowance of losses

11 under section 267 or 707(b), or

12 ‘‘(B) the basis of the residence in the

13 hands of the person acquiring it is deter14 mined—

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

16 to the adjusted basis of such residence in

17 the hands of the person from whom it is

18 acquired, or

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

20 to property acquired from a decedent).

21 ‘‘(d) RECAPTURE FOR CERTAIN DISPOSITIONS.—

22 ‘‘(1) IN GENERAL.—Except as provided in para23 graphs (2) and (3), if the taxpayer disposes of prop24 erty with respect to the purchase of which a credit

25 was allowed under subsection (a) at any time within
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1 36 months after the date the taxpayer acquired the

2 property as his principal residence, then the tax im3 posed under this chapter for the taxable year in

4 which the disposition occurs is increased by an

5 amount equal to the amount allowed as a credit for

6 the purchase of such property.

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

8 connection with a disposition described in paragraph

9 (1) and within the applicable period prescribed in

10 section 1034, the taxpayer purchases a new principal

11 residence, then the provisions of paragraph (1) shall

12 not apply and the tax imposed by this chapter for

13 the taxable year in which the new principal residence

14 is purchased is increased to the extent the amount

15 of the credit that could be claimed under this section

16 on the purchase of the new residence (determined

17 without regard to subsection (e)) is less than the

18 amount of credit claimed by the taxpayer under this

19 section.

20 ‘‘(3) DEATH OF OWNER; CASUALTY LOSS; IN21 VOLUNTARY CONVERSION; ETC.—The provisions of

22 paragraph (1) do not apply to—

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

24 account of the death of any individual having a

25 legal or equitable interest therein occurring dur-
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1 ing the 36-month period to which reference is

2 made under paragraph (1),

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

4 is substantially or completely destroyed by a

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

6 compulsorily or involuntarily converted (within

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

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

9 in a divorce or legal separation proceeding

10 where the residence is sold or the other spouse

11 retains the residence as a principal residence.

12 ‘‘(e) PROPERTY TO WHICH SECTION APPLIES.—

13 ‘‘(1) IN GENERAL.—The provisions of this sec14 tion apply to a principal residence if—

15 ‘‘(A) the taxpayer acquires the residence

16 on or after January 1, 1993, and before Janu17 ary 1, 1994, or

18 ‘‘(B) the taxpayer enters into, on or after

19 January 1, 1993, and before January 1, 1994,

20 a binding contract to acquire the residence, and

21 acquires and occupies the residence before July

22 1, 1994.’’

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

24 for subpart A of part IV of subchapter A of chapter 1
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1 of such Code is amended by inserting after the item relat2 ing to section 22 the following new item:

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

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

4 this section shall take effect on January 1, 1993.

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