I 

111TH CONGRESS 

1ST SESSION H. R. 3640 

To amend the Internal Revenue Code of 1986 to extend and expand the 

first-time homebuyers credit and to provide a loss deduction on the 

sale of a principal residence. 

IN THE HOUSE OF REPRESENTATIVES 

SEPTEMBER 24, 2009 

Mr. CHILDERS (for himself and Mr. KRATOVIL) 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 extend 

and expand the first-time homebuyers credit and to provide a loss deduction on the sale of a principal residence. 

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

3 SECTION 1. HOMEBUYER CREDIT ALLOWED FOR ANY PUR4 CHASE OF PRINCIPAL RESIDENCE. 

5 (a) IN GENERAL.—Subsection (a) of section 36 of the 

6 Internal Revenue Code of 1986 is amended by striking 

7 ‘‘who is a first-time homebuyer of a principal residence’’ 

8 and inserting ‘‘who purchases a principal residence’’. 


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1 (b) APPLICATION TO ONLY 1 SALE.—Subsection (b) 

2 of section 36 of such Code is amended by adding at the 

3 end the following new paragraph: 

4 ‘‘(3) APPLICATION TO ONLY 1 SALE.— 

5 ‘‘(A) IN GENERAL.—Subsection (a) shall 

6 not apply to more than 1 sale or exchange of 

7 a principal residence by the individual. 

8 ‘‘(B) SPECIAL RULE FOR JOINT RE9 TURNS.—In the case of a joint return with re10 spect to the sale or exchange of a principal resi11 dence, if a credit was allowable under sub12 section (a) to a spouse for a prior sale or ex13 change of a principal residence, paragraph (1) 

14 shall be applied by reducing the $8,000 in sub15 paragraph (A) thereof and the $4,000 in sub16 paragraph (B) thereof by the credit so allowable 

17 (one-half of such credit in the case of a joint re18 turn).’’. 

19 (c) CONFORMING AMENDMENTS.— 

20 (1) Subsection (c) of section 36 of such Code 

21 is amended by striking paragraph (1) (defining first22 time homebuyer) and by redesignating paragraphs 

23 (2), (3), (4), and (5) as paragraphs (1), (2), (3), 

24 and (4), respectively. 


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1 (2) The heading for section 36 of such Code is 

2 amended by striking ‘‘First-time’’. 

3 (3) The item in the table of sections for subpart 

4 C of part IV of subchapter A of chapter 1 of such 

5 Code relating to section 36 is amended to read as 

6 follows: 

‘‘Sec. Homebuyer credit.’’. 

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

8 this section shall apply to residences purchased after the 

9 date of the enactment of this Act. 

10 SEC. 2. 1-YEAR EXTENSION OF HOMEBUYER CREDIT. 

11 (a) IN GENERAL.—Subsection (h) of section 36 of the 

12 Internal Revenue Code is amended by striking ‘‘December 

13 1, 2009’’ and inserting ‘‘December 1, 2010’’. 

14 (b) EXTENSION OF WAIVER OF RECAPTURE.—Sub15 paragraph (D) of section 36(f)(4) of such Code is amend16 ed— 

17 (1) by striking ‘‘December 1, 2009’’ and insert18 ing ‘‘December 1, 2010’’, and 

19 (2) in the heading by striking ‘‘FOR PURCHASES

20 IN 2009’’ and inserting ‘‘CERTAIN PURCHASES’’. 

21 (c) ELECTION TO TREAT PURCHASE IN PRIOR

22 YEAR.—Subsection (g) of such Code is amended to read 

23 as follows: 

24 ‘‘(g) ELECTION TO TREAT PURCHASE IN PRIOR

25 YEAR.—For purposes of this section (other than subVerDate Nov 24 2008 21:26 Sep 24, 2009 Jkt 079200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H3640.IH H3640

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1 sections (c) and (f)(4)(D)), a taxpayer may elect to treat 

2 a purchase of a principal residence— 

3 ‘‘(1) after December 31, 2008, and before Jan4 uary 1, 2010, as made on December 31, 2008, and 

5 ‘‘(2) after December 31, 2009, and before De6 cember 1, 2010, as made on December 31, 2009.’’. 

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

8 this section shall take effect on the date of the enactment 

9 of this Act. 

10 SEC. 3. DEDUCTION FOR LOSS FROM SALE OF PRINCIPAL 

11 RESIDENCE. 

12 (a) IN GENERAL.—Part VII of subchapter B of chap13 ter I of the Internal Revenue Code of 1986 (relating to 

14 additional itemized deductions for individuals) is amended 

15 by redesignating section 224 as section 225 and by insert16 ing after section 223 the following new section: 

17 ‘‘SEC. 224. LOSS FROM SALE OF PRINCIPAL RESIDENCE. 

18 ‘‘(a) ALLOWANCE OF DEDUCTION.—In the case of an 

19 individual, there shall be allowed as a deduction for the 

20 taxable year any loss recognized on the sale or exchange 

21 of property during the taxable year if, during the 5-year 

22 period ending on the date of the sale or exchange, such 

23 property has been owned and used by the taxpayer as the 

24 taxpayer’s principal residence for periods aggregating 2 

25 years or more. 


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1 ‘‘(b) LIMITATIONS.— 

2 ‘‘(1) AGGREGATE LIMITATION.—The aggregate 

3 amount allowed as a deduction under subsection (a) 

4 for all taxable years shall not exceed $6,000 

5 ($12,000 in the case of a joint return). 

6 ‘‘(2) ANNUAL LIMITATION.— 

7 ‘‘(A) IN GENERAL.—The amount allowed 

8 to a taxpayer as a deduction under subsection 

9 (a) for a taxable year shall not exceed $2,000 

10 ($4,000 in the case of a joint return). 

11 ‘‘(B) CARRYFORWARD.—If the deduction 

12 allowable under subsection (a) for any taxable 

13 year exceeds the limitation imposed by subpara14 graph (A) for the taxable year, the excess shall 

15 be carried to each of the 2 succeeding taxable 

16 years and added to the deduction allowable 

17 under subsection (a) for such succeeding year. 

18 ‘‘(3) EXCLUSION OF LOSS ALLOCATED TO NON19 QUALIFIED USE.— 

20 ‘‘(A) IN GENERAL.—Subsection (a) shall 

21 not apply to so much of the loss from the sale 

22 or exchange of property as is allocated to peri23 ods of nonqualified use. 


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1 ‘‘(B) ALLOCATION.—For purposes of sub2 paragraph (A), loss shall be allocated to periods 

3 of nonqualified use based on the ratio which— 

4 ‘‘(i) the aggregate periods of non5 qualified use during the period such prop6 erty was owned by the taxpayer, bears to 

7 ‘‘(ii) the period such property was 

8 owned by the taxpayer. 

9 ‘‘(C) PERIOD OF NONQUALIFIED USE; CO10 ORDINATION WITH RECOGNITION OF GAIN AT11 TRIBUTABLE TO DEPRECIATION.—For purposes 

12 of this paragraph, rules similar to the rules of 

13 subparagraphs (C) and (D) of section 121(b)(5) 

14 shall apply. 

15 ‘‘(4) APPLICATION TO ONLY 1 SALE.— 

16 ‘‘(A) IN GENERAL.—Subsection (a) shall 

17 not apply to more than 1 sale or exchange of 

18 a principal residence by the taxpayer. 

19 ‘‘(B) SPECIAL RULE FOR JOINT RE20 TURNS.—In the case of a joint return with re21 spect to the sale or exchange of a principal resi22 dence, if a deduction was allowable under sub23 section (a) to a spouse for a prior sale or ex24 change of a principal residence, paragraphs (1) 

25 and (2)(A) shall be applied by reducing the dolVerDate Nov 24 2008 21:26 Sep 24, 2009 Jkt 079200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H3640.IH H3640

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1 lar amounts therein by the deduction so allow2 able (one-half of such deduction in the case of 

3 a joint return). 

4 ‘‘(c) APPLICABLE RULES.—For purposes of this sec5 tion, rules similar to the rules of subsection (d) of section 

6 121 shall apply, except that paragraph (6) thereof shall 

7 be applied by substituting ‘loss’ for ‘gain’. 

8 ‘‘(d) ELECTION TO HAVE SECTION NOT APPLY.— 

9 This section shall not apply to any sale or exchange with 

10 respect to which the taxpayer elects not to have this sec11 tion apply. 

12 ‘‘(e) TERMINATION.—The section shall not apply to 

13 the sale or exchange of a principal residence after Decem14 ber 31, 2010.’’. 

15 (b) DEDUCTION ALLOWED IN COMPUTING AD16 JUSTED GROSS INCOME.—Subsection (a) of section 62 of 

17 such Code is amended by inserting before the last sentence 

18 the following new paragraph: 

19 ‘‘(22) LOSS FROM SALE OF PRINCIPAL RESI20 DENCE.—The deduction allowed by section 224.’’. 

21 (c) CLERICAL AMENDMENTS.—The table of sections 

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

23 is amended by striking the item relating to section 224 

24 and inserting the following: 

‘‘Sec. 224. Loss from sale of principal residence. 

‘‘Sec. 225. Cross reference.’’. 


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

2 this section shall apply to taxable years beginning after 

3 December 31, 2008. 

Æ 


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