I
104TH CONGRESS
1ST SESSION
H. R. 1857
To amend the Internal Revenue Code of 1986 to allow an individual who
has attained age 55 a deduction for amounts paid for insurance to
be used to pay real property taxes on the principal residence of the
individual after the individual has attained age 65.
IN THE HOUSE OF REPRESENTATIVES
JUNE 15, 1995
Mr. FRANKS of New Jersey 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 an
individual who has attained age 55 a deduction for
amounts paid for insurance to be used to pay real prop-
erty taxes on the principal residence of the individual
after the individual has attained age 65.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. DEDUCTION FOR INDIVIDUALS WHO HAVE AT-
TAINED AGE 55 FOR REAL PROPERTY TAX IN-
SURANCE WITH RESPECT TO PRINCIPAL RES-
IDENCE.
(a) IN GENERAL.—Part VII of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 (relating to
additional itemized deductions for individuals) is amended
by redesignating section 220 as section 221 and by insert-
ing after section 219 the following new section:
‘‘SEC. 220. DEDUCTION FOR INDIVIDUALS WHO HAVE AT-
TAINED AGE 55 FOR REAL PROPERTY TAX IN-
SURANCE WITH RESPECT TO PRINCIPAL RES-
IDENCE.
‘‘(a) IN GENERAL.—In the case of an individual who
has attained age 55 before the close of the taxable year,
there shall be allowed as a deduction an amount equal to
the premiums paid or incurred during the taxable year for
any qualified real property tax insurance contract with re-
spect to the principal residence of such individual.
‘‘(b) QUALIFIED REAL PROPERTY TAX INSURANCE
CONTRACT.—For purposes of this section—
‘‘(1) IN
GENERAL.—The term ‘qualified real
property tax insurance contract’ means any insur-
ance contract—
‘‘(A) which permits premiums to be paid
for such insurance only after the policyholder
attains age 55 and before the policyholder at-
tains age 65,
‘‘(B) which pays, at the election of the pol-
icyholder—
‘‘(i) the excess of—
‘‘(I) the amount of the State and
local real property taxes imposed on
the principal residence of the policy-
holder for each real property tax year
in the insured period, over
‘‘(II) the amount of such taxes
imposed on such residence for the last
real property tax year beginning be-
fore the insured period (or, if later,
the first real property tax year for
which the policyholder was liable for
such taxes imposed on such resi-
dence), or
‘‘(ii) the amount of the State and
local real property taxes imposed on the
principal residence of the policyholder for
each real property tax year in the insured
period,
‘‘(C) which provides for a refund of the
cash value of the insurance contract (if any)
if—
‘‘(i) the residence is sold or exchanged
before the end of the insured period, or
‘‘(ii) the insured period ends by rea-
son of the last sentence of paragraph (2),
and
‘‘(D) in the case of a husband and wife
who are joint policyholders, which provides for
a waiver of premiums for such insurance after
the death of either spouse.
‘‘(2) INSURED PERIOD.—The term ‘insured pe-
riod’ means—
‘‘(A) in the case of an election to have
paragraph (1)(B)(i) apply, the 10 real property
tax years beginning after the date the policy-
holder attains age 65, and
‘‘(B) in the case of an election to have
paragraph (1)(B)(ii) apply, the number of real
property tax years (beginning after the date the
policyholder attains age 65) selected by the pol-
icyholder but only if the number selected is 5,
10, 15, or 20.
In no event shall the insured period end after the
close of the real property tax year in which the last
policyholder dies.
‘‘(3) PRINCIPAL RESIDENCE.—The term ‘prin-
cipal residence’ has the meaning given to such term
by section 1034.
‘‘(4) STATE
AND
LOCAL
REAL
PROPERTY
TAXES.—The term ‘State and local real property
taxes’ means any real property tax which is a State
or local tax (within the meaning of section
164(b)(2)); except that such term shall not include
any amount for which a deduction is not allowable
by reason of section 164(c)(1).
‘‘(c) PREMIUM REQUIREMENTS.—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), an insurance contract shall be treated as
a qualified real property tax insurance contract only
if the annual premium for any year does not exceed
the amount equal to 150 percent of the amount of
the State and local real property taxes imposed on
the principal residence of the policyholder for the
real property tax year ending during the preceding
year.
‘‘(2) SINGLE
PREMIUMS
PERMITTED
IN
CER-
TAIN CASES.—Paragraph (1) shall not apply to any
premium paid during any calendar year if—
‘‘(A) not less than the amount of such pre-
mium is paid or distributed during such year to
the taxpayer from any individual retirement
plan of the taxpayer, or
‘‘(B) the taxpayer receives during such
year a lump sum distribution (as defined in sec-
tion 402(d)(4)) in an amount not less than the
amount of such premium.
This paragraph shall not apply if the amount of any
premium paid, when added to premiums previously
paid, exceeds the amount reasonably necessary (as
determined under regulations prescribed by the Sec-
retary) to fund the payments referred to in sub-
section (b)(1)(B).
‘‘(d) SPECIAL RULES FOR MARRIED INDIVIDUALS.—
For purposes of this section—
‘‘(1) IN GENERAL.—In the case of a husband
and wife who are joint policyholders, this section
shall be applied by taking into account only the age
of the older spouse.
‘‘(2) PROPERTY OF DECEASED SPOUSE.—If—
‘‘(A) an individual’s spouse died during the
period applicable under subsection (b)(1)(A),
‘‘(B) such spouse was the older spouse,
and
‘‘(C) any premium for any qualified real
property tax insurance contract was paid by ei-
ther spouse before the date of such death,
the age the older spouse would have been shall con-
tinue to be the only age taken into account for pur-
poses of this section.
‘‘(e) OTHER SPECIAL RULES.—
‘‘(1) TAX TREATMENT OF REFUND OF CASH
VALUE.—Any refund of the cash value of any quali-
fied real property tax insurance contract shall be in-
cludible in gross income for the taxable year in
which received.
‘‘(2) DENIAL OF DEDUCTION FOR PAYMENT OF
TAXES.—No deduction shall be allowed under this
chapter for any payment of tax under any qualified
real property tax insurance contract.
‘‘(3) TENANT-STOCKHOLDER IN COOPERATIVE
HOUSING CORPORATION.—A rule similar to the rule
of section 1034(f) shall apply for purposes of this
section.’’
(b) DEDUCTION ALLOWED WHETHER OR NOT TAX-
PAYER ITEMIZES OTHER DEDUCTIONS.—Subsection (a)
of section 62 of such Code is amended by inserting after
paragraph (15) the following new paragraph:
‘‘(16) QUALIFIED REAL PROPERTY TAX INSUR-
ANCE PREMIUMS.—The deduction allowed by section
220.’’
(c) CLERICAL AMENDMENT.—The table of sections
for part VII of subchapter B of chapter 1 of such Code
is amended by striking the last item and inserting the fol-
lowing new items:
‘‘Sec. 220. Deduction for individuals who have attained age 55 for
real property tax insurance with respect to principal
residence.
‘‘Sec. 221. Cross reference.’’
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
the date of the enactment of this Act.
Æ