I

107TH CONGRESS

1ST SESSION H. R. 211

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 3, 2001

Mr. SWEENEY 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. SHORT TITLE.

4 This Act may be cited as the ‘‘First-Time Homebuyer

5 Tax Credit Act of 2001’’.

6 SEC. 2. CREDIT FOR FIRST-TIME HOMEBUYERS.

7 (a) IN GENERAL.—Subpart A of part IV of sub8 chapter A of chapter 1 of the Internal Revenue Code of

9 1986 (relating to nonrefundable personal credits) is
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1 amended by inserting after section 25A the following new

2 section:

3 ‘‘SEC. 25B. PURCHASE OF PRINCIPAL RESIDENCE BY FIRST4 TIME HOMEBUYER.

5 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in6 dividual who is a first-time homebuyer of a principal resi7 dence in the United States during any taxable year, there

8 shall be allowed as a credit against the tax imposed by

9 this chapter for the taxable year an amount equal to 10

10 percent of the purchase price of the residence.

11 ‘‘(b) LIMITATIONS.—

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

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

14 ‘‘(2) MARRIED INDIVIDUALS FILING JOINTLY.—

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

16 return, the credit under this section is allowable only

17 if both the husband and wife are first-time home18 buyers, and the amount specified under paragraph

19 (1) shall apply to the joint return.

20 ‘‘(3) MARRIED INDIVIDUALS FILING SEPA21 RATELY.—In the case of a married individual filing

22 a separate return, the credit under this section is al23 lowable only if the individual is a first-time home24 buyer, and subsection (a) shall be applied by sub25 stituting ‘$2,500’ for ‘$5,000’.
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1 ‘‘(4) OTHER TAXPAYERS.—In the case that 2 or

2 more individuals who are not married purchase a

3 principal residence together—

4 ‘‘(A) the credit under this section is allow5 able only if each of the individuals is a first6 time homebuyer, and

7 ‘‘(B) the amount of the credit allowed

8 under subsection (a) shall be allocated among

9 such individuals in such manner as the Sec10 retary may prescribe, except that the total

11 amount of the credits allowed to all such indi12 viduals shall not exceed $5,000.

13 ‘‘(5) YEAR FOR WHICH CREDIT ALLOWED.—

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

15 shall be allowed in the taxable year in which the res16 idence is purchased and the remaining fifty percent

17 of the credit shall be allowed in the succeeding tax18 able year.

19 ‘‘(c) DEFINITIONS.—For purposes of this section—

20 ‘‘(1) FIRST-TIME HOMEBUYER.—

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

22 homebuyer’ has the same meaning as when

23 used in section 72(t)(8)(D)(i), except that ‘3-

24 year period’ shall be substituted for ‘2-year pe25 riod’ in subclause (I) thereof.
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1 ‘‘(B) ONE-TIME ONLY.—Except as pro2 vided in subsection (f), if an individual is treat3 ed as a first-time homebuyer with respect to

4 any principal residence, such individual may not

5 be treated as a first-time homebuyer with re6 spect to any other principal residence.

7 ‘‘(2) PRINCIPAL RESIDENCE.—The term ‘prin8 cipal residence’ has the same meaning as when used

9 in section 121. An interest in a partnership, S cor10 poration, or trust that owns an interest in a resi11 dence is not considered an interest in a residence for

12 purposes of this paragraph except as may be pro13 vided in regulations.

14 ‘‘(3) PURCHASE.—

15 ‘‘(A) IN GENERAL.—The term ‘purchase’

16 means any acquisition, but only if—

17 ‘‘(i) the property is not acquired from

18 a person whose relationship to the person

19 acquiring it would result in the disallow20 ance of losses under section 267 or 707(b)

21 (but, in applying sections 267 (b) and (c)

22 for purposes of this section, paragraph (4)

23 of section 267(c) shall be treated as pro24 viding that the family of an individual shall
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1 include only his spouse, ancestors, and lin2 eal descendants), and

3 ‘‘(ii) the basis of the property in the

4 hands of the person acquiring such prop5 erty is not determined—

6 ‘‘(I) in whole or in part by ref7 erence to the adjusted basis of such

8 property in the hands of the person

9 from whom acquired, or

10 ‘‘(II) under section 1014(a) (re11 lating to property acquired from a de12 cedent).

13 ‘‘(B) CONSTRUCTION.—A residence which

14 is constructed by the taxpayer shall be treated

15 as purchased by the taxpayer.

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

17 price’ means the adjusted basis of the principal resi18 dence on the date of acquisition (within the meaning

19 of section 72(t)(8)(D)(iii)).

20 ‘‘(d) CARRYFORWARD OF UNUSED CREDITS.—If the

21 credit allowable under subsection (a) for any taxable year

22 exceeds the limitation imposed by section 26(a) for such

23 taxable year reduced by the sum of the credits allowable

24 under this subpart (other than this section and section

25 23), such excess shall be carried to the succeeding taxable
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1 year and added to the credit allowable under subsection

2 (a) for such taxable year. No credit may be carried for3 ward under this subsection to any taxable year following

4 the fifth taxable year after the taxable year in which the

5 residence is purchased. For purposes of the preceding sen6 tence, credits shall be treated as used on a first-in first7 out basis.

8 ‘‘(e) REPORTING.—If the Secretary requires informa9 tion reporting under section 6045 by a person described

10 in subsection (e)(2) thereof to verify the eligibility of tax11 payers for the credit allowable by this section, the excep12 tion provided by section 6045(e)(5) shall not apply.

13 ‘‘(f) RECAPTURE FOR CERTAIN DISPOSITIONS.—

14 ‘‘(1) IN GENERAL.—Except as provided in para15 graphs (2) and (3), if the taxpayer disposes of prop16 erty with respect to the purchase of which a credit

17 was allowed under subsection (a) at any time within

18 36 months after the date the taxpayer acquired the

19 property as his principal residence, then the tax im20 posed under this chapter for the taxable year in

21 which the disposition occurs is increased by an

22 amount equal to the amount allowed as a credit for

23 the purchase of such property.

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

25 connection with a disposition described in paragraph
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1 (1) and within the 2-year period beginning on the

2 date of such disposition, the taxpayer purchases a

3 new principal residence—

4 ‘‘(A) paragraph (1) shall not apply, and

5 ‘‘(B) the tax imposed by this chapter for

6 the taxable year in which the new principal resi7 dence is purchased is increased by an amount

8 equal to—

9 ‘‘(i) the amount of credit claimed by

10 the taxpayer under this section, reduced

11 (but not below zero) by

12 ‘‘(ii) the amount of the credit that

13 could be claimed under this section on the

14 purchase of the new residence.

15 ‘‘(3) DEATH OF OWNER; CASUALTY LOSS; IN16 VOLUNTARY CONVERSION; ETC.—The provisions of

17 paragraph (1) do not apply to—

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

19 account of the death of any individual having a

20 legal or equitable interest therein occurring dur21 ing the 36-month period to which reference is

22 made under paragraph (1),

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

24 is substantially or completely destroyed by a

25 casualty described in section 165(c)(3) or
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1 compulsorily or involuntarily converted (within

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

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

4 in a divorce or legal separation proceeding

5 where the residence is sold or the other spouse

6 retains the residence as a principal residence.

7 ‘‘(g) DENIAL OF DOUBLE BENEFIT.—No credit shall

8 be allowed under subsection (a) for any expense—

9 ‘‘(1) for which a deduction or credit is allowed

10 under any other provision of this chapter, or

11 ‘‘(2) to the extent that the aggregate of such

12 expenses does not exceed qualified first-time home13 buyer distributions (as defined by section 72(t)(8)

14 made with respect to the principle residence.

15 ‘‘(h) BASIS ADJUSTMENT.—For purposes of this sub16 title, if a credit is allowed under this section with respect

17 to the purchase of any residence, the basis of such resi18 dence shall be reduced by the amount of the credit so al19 lowed.

20 ‘‘(i) PROPERTY TO WHICH SECTION APPLIES.—

21 ‘‘(1) IN GENERAL.—The provisions of this sec22 tion apply to a principal residence if—

23 ‘‘(A) the taxpayer acquires the residence

24 on or after January 1, 2001, and before Janu25 ary 1, 2003, or
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1 ‘‘(B) the taxpayer enters into, on or after

2 January 1, 2001, and before January 1, 2003,

3 a binding contract to acquire the residence, and

4 acquires and occupies the residence before July

5 1, 2003.’’.

6 (b) CONFORMING AMENDMENT.—Subsection (a) of

7 section 1016 of such Code (relating to general rule for

8 adjustments to basis) is amended by striking ‘‘and’’ at the

9 end of paragraph (26), by striking the period at the end

10 of paragraph (27) and inserting ‘‘, and’’, and by adding

11 at the end thereof the following new paragraph:

12 ‘‘(28) in the case of a residence with respect to

13 which a credit was allowed under section 25B, to the

14 extent provided in section 25B(h).’’.

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

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

17 of such Code is amended by inserting after the item relat18 ing to section 25A the following new item:

‘‘Sec. 25B. Purchase of principal residence by first-time homebuyer.’’.

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

20 this section shall take effect on January 1, 2001.

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