(b) GRANT
DURATION, AMOUNT, AND
ALLOCA-
TION.— 
(1) DURATION.—A grant awarded under this 
section shall be for a period not to exceed one year. 
(2) 
MAXIMUM
GRANT
AMOUNT.—A 
grant 
awarded under this section shall not exceed 
$300,000. 
(c) ALLOCATION.— 
(1) MINIMUM
ALLOCATION.—Subject to the 
availability of appropriations, the Administrator 
shall ensure that the total funds allocated under this 
section to units of local governments and Indian 
tribes in a State shall not be less than $1,000,000. 
(2) RATABLE
REDUCTION.—If the amount 
made available for grants under this section for any 
fiscal year is less than the amount required to pro-
vide the minimum allocation of funds under para-
graph (1) to units of local government and Indian 
tribes in each State, then the amount of such min-
imum allocation shall be ratably reduced. 
SEC. 511. PROMISE COORDINATING COUNCILS. 
To be eligible to receive a grant under this subtitle, 
a unit of local government or an Indian tribe shall estab-
lish a PROMISE Coordinating Council for each commu-
nity of such unit or tribe, respectively, for which such unit 
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or tribe is applying for a grant under this subtitle. Each 
such community shall include one or more designated geo-
graphic areas identified on the list required under section 
402(a)(2). The members of such a PROMISE Coordi-
nating Council shall be representatives of public and pri-
vate sector entities and individuals that— 
(1) shall include, to the extent possible, at least 
one representative from each of the following: 
(A) the local chief executive’s office; 
(B) a local educational agency; 
(C) a local health agency or provider; 
(D) a local mental health agency or pro-
vider, unless the representative under subpara-
graph (C) also meets the requirements of this 
subparagraph; 
(E) a local public housing agency; 
(F) a local law enforcement agency; 
(G) a local child welfare agency; 
(H) a local juvenile court; 
(I) a local juvenile prosecutor’s office; 
(J) a private juvenile residential care enti-
ty; 
(K) a local juvenile public defender’s office; 
(L) a State juvenile correctional entity; 
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(M) a local business community represent-
ative; and 
(N) a local faith-based community rep-
resentative; 
(2) shall include two representatives from each 
of the following: 
(A) parents who have minor children, and 
who have an interest in the local juvenile or 
criminal justice systems; 
(B) youth between the ages of 15 and 24 
who reside in the jurisdiction of the unit or 
tribe; and 
(C) members from nonprofit community- 
based organizations that provide effective delin-
quency prevention and intervention to youth in 
the jurisdiction of the unit or tribe; and 
(3) may include other members, as the unit or 
tribe determines to be appropriate. 
SEC. 512. NEEDS AND STRENGTHS ASSESSMENT. 
(a) ASSESSMENT.—Each PROMISE Coordinating 
Council receiving funds from a unit of local government 
or Indian tribe under this subtitle shall conduct an objec-
tive strengths and needs assessment of the resources of 
the community for which such PROMISE Coordinating 
Council was established, to identify the unmet needs of 
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youth in the community with respect to evidence-based 
and promising practices related to juvenile delinquency 
and criminal street gang activity prevention and interven-
tion. Such assessment shall include, with respect to the 
community for which such PROMISE Coordinating Coun-
cil was established— 
(1) the number of youth who are at-risk of in-
volvement in juvenile delinquency or street gang ac-
tivity; 
(2) the number of youth who are involved in ju-
venile delinquency or criminal street gang activity, 
including the number of such youth who are at high 
risk of continued involvement; 
(3) youth unemployment rates during the sum-
mer; 
(4) the number of individuals on public finan-
cial assistance (including a breakdown of the num-
bers of men, women, and children on such assist-
ance); 
(5) the estimated number of youth who are 
chronically truant; 
(6) the number of youth who have dropped out 
of school in the previous year; 
(7) for the year before such assessment, the es-
timated total amount expended (by the community 
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and other entities) for the incarceration of offenders 
who were convicted or adjudicated delinquent for an 
offense that was committed in such community, in-
cluding amounts expended for the incarceration of 
offenders in prisons, jails, and juvenile facilities that 
are located in the United States but are not located 
in such community; 
(8) a comparison of the amount under para-
graph (7) with an estimation of the amount that 
would be expended for the incarceration of offenders 
described in such paragraph if the number of offend-
ers described in such paragraph was equal to the na-
tional average incarceration rate per 100,000 popu-
lation; and 
(9) a description of evidence-based and prom-
ising practices related to juvenile delinquency and 
criminal street gang activity prevention available for 
youth in the community, including school-based pro-
grams, after school programs (particularly programs 
that have activities available for youth between 
3 p.m. and 6 p.m. in the afternoon), weekend ac-
tivities and programs, youth mentoring programs, 
faith and community-based programs, summer ac-
tivities, and summer jobs, if any; and 
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(10) a description of evidence-based and prom-
ising intervention practices available for youth in the 
community. 
(b) LIMITATION ON USE OF ASSESSMENT INFORMA-
TION.—Information gathered pursuant to this section may 
be used for the sole purpose of developing a PROMISE 
Plan in accordance with this subtitle. 
SEC. 513. PROMISE PLAN COMPONENTS. 
(a) IN GENERAL.—Each PROMISE Coordinating 
Council receiving funds from a unit of local government 
or Indian tribe under this subtitle shall develop a PROM-
ISE Plan to provide for the coordination of, and, as appro-
priate, to support the delivery of, evidence-based and 
promising practices related to juvenile delinquency and 
criminal street gang activity prevention and intervention 
to youth and families who reside in the community for 
which such PROMISE Coordinating Council was estab-
lished. Such a PROMISE Plan shall— 
(1) include the strategy by which the PROM-
ISE Coordinating Council plans to prioritize and al-
locate resources and services toward the unmet 
needs of youth in the community, consistent with the 
needs and available resources of communities with 
the greatest need for assistance, as determined pur-
suant to section 402; 
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(2) include a combination of evidence-based and 
promising prevention and intervention practices that 
are responsive to the needs of the community; and 
(3) ensure that cultural and linguistic needs of 
the community are met. 
(b) MANDATORY COMPONENTS.—Each PROMISE 
Plan shall— 
(1) include a plan to connect youth identified in 
paragraphs (1) and (2) of section 512(a) to evi-
dence-based and promising practices related to juve-
nile delinquency and criminal street gang activity 
prevention and intervention; 
(2) identify the amount or percentage of local 
funds that are available to the PROMISE Coordi-
nating Council to carry out the PROMISE Plan; 
(3) provide strategies to improve indigent de-
fense delivery systems, with particular attention 
given to groups of children who are disproportion-
ately represented in the State delinquency system 
and Federal criminal justice system, as compared to 
the representation of such groups in the general 
population of the State; 
(4) provide for training (which complies with 
the American Bar Association Juvenile Justice 
Standards for the representation and care of youth 
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in the juvenile justice system) of prosecutors, de-
fenders, probation officers, judges and other court 
personnel related to issues concerning the develop-
mental needs, challenges, and potential of youth in 
the juvenile justice system (including training re-
lated to adolescent development and mental health 
issues, and the expected impact of evidence-based 
practices and cost reduction strategies); 
(5) ensure that the number of youth involved in 
the juvenile delinquency and criminal justice systems 
does not increase as a result of the activities under-
taken with the funds provided under this subtitle; 
(6) describe the coordinated strategy that will 
be used by the PROMISE Coordinating Council to 
provide at-risk youth with evidence-based and prom-
ising practices related to juvenile delinquency and 
criminal street gang activity prevention and inter-
vention; 
(7) propose the performance evaluation process 
to be used to carry out section 530(d), which shall 
include performance measures to assess efforts to 
address the unmet needs of youth in the community 
with evidence-based and promising practices related 
to juvenile delinquency and criminal street gang ac-
tivity prevention and intervention; and 
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(8) identify the research partner the PROMISE 
Coordinating Council will use to obtain information 
on evidence-based and promising practices related to 
juvenile delinquency and criminal street gang activ-
ity prevention and intervention, and for the evalua-
tion under section 530(d) of the results of the activi-
ties carried out with funds under this subtitle. 
(c) VOLUNTARY COMPONENTS.—In addition to the 
components under subsection (b), a PROMISE Plan may 
include evidence-based or promising practices related to 
juvenile delinquency and criminal street gang activity pre-
vention and intervention in the following categories: 
(1) Early childhood development services (such 
as pre-natal and neo-natal health services), early 
childhood prevention, voluntary home visiting pro-
grams, nurse-family partnership programs, par-
enting and healthy relationship skills training, child 
abuse prevention programs, Early Head Start, and 
Head Start. 
(2) Child protection and safety services (such as 
foster care and adoption assistance programs), fam-
ily stabilization programs, child welfare services, and 
family violence intervention programs. 
(3) Youth and adolescent development services, 
including job training and apprenticeship programs, 
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job placement and retention training, education and 
after school programs (such as school programs with 
shared governance by students, teachers, and par-
ents, and activities for youth between the hours of 
3 p.m. and 6 p.m. in the afternoon), mentoring pro-
grams, conflict resolution skills training, sports, 
arts, life skills, employment and recreation pro-
grams, summer jobs, and summer recreation pro-
grams, and alternative school resources for youth 
who have dropped out of school or demonstrate 
chronic truancy. 
(4) Health and mental health services, includ-
ing cognitive behavioral therapy, play therapy, and 
peer mentoring and counseling. 
(5) Substance abuse counseling and treatment 
services, including harm-reduction strategies. 
(6) Emergency, transitional, and permanent 
housing assistance (such as safe shelter and housing 
for runaway and homeless youth). 
(7) Targeted gang prevention, intervention, and 
exit services such as tattoo removal, successful mod-
els of anti-gang crime outreach programs (such as 
‘‘street worker’’ programs), and other criminal street 
gang truce or peacemaking activities. 
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100 
(8) Training and education programs for preg-
nant teens and teen parents. 
(9) Alternatives to detention and confinement 
programs (such as mandated participation in com-
munity service, restitution, counseling, and intensive 
individual and family therapeutic approaches). 
(10) Pre-release, post-release, and reentry serv-
ices to assist detained and incarcerated youth with 
transitioning back into and reentering the commu-
nity. 
SEC. 514. AUTHORIZATION OF APPROPRIATIONS. 
Subject to the limitation under section 402(e), there 
are authorized to be appropriated for fiscal year 2015, 
such sums as may be necessary to carry out this subtitle 
and section 402. 
Subtitle B—PROMISE 
Implementation Grants 
SEC. 530. PROMISE IMPLEMENTATION GRANTS AUTHOR-
IZED. 
(a) PROMISE IMPLEMENTATION GRANTS AUTHOR-
IZED.—The Administrator of the Office of Juvenile Jus-
tice and Delinquency Prevention is authorized to award 
grants to units of local government and Indian tribes to 
assist PROMISE Coordinating Councils with imple-
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101 
menting PROMISE Plans developed pursuant to subtitle 
A. 
(b) GRANT DURATION AND AMOUNT.— 
(1) DURATION.—A grant awarded under this 
subtitle shall be for a three-year period. 
(2) 
MAXIMUM
GRANT
AMOUNT.—A 
grant 
awarded under this subtitle shall not be for more 
than $10,000,000 per year for each year of the 
grant period. 
(c) NON-FEDERAL FUNDS REQUIRED.—For each fis-
cal year during the three-year grant period for a grant 
under this subtitle, each unit of local government or In-
dian tribe receiving such a grant for a PROMISE Coordi-
nating Council shall provide, from non-Federal funds, in 
cash or in-kind, 25 percent of the costs of the activities 
carried out with such grant. 
(d) EVALUATION.—Of any funds provided to a unit 
of local government or an Indian tribe for a grant under 
this subtitle, not more than $100,000 shall be used to pro-
vide a contract to a competitively selected organization to 
assess the progress of the unit or tribe in addressing the 
unmet needs of youth in the community, in accordance 
with the performance measures under section 513(b)(7). 
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102 
SEC. 531. PROMISE IMPLEMENTATION GRANT APPLICA-
TION REQUIREMENTS. 
(a) APPLICATION REQUIRED.—To be eligible to re-
ceive a PROMISE Implementation grant under this sub-
title, a unit of local government or Indian tribe that re-
ceived a PROMISE Assessment and Planning grant under 
subtitle A shall submit an application to the Administrator 
of the Office of Juvenile Justice and Delinquency Preven-
tion not later than one year after the date such unit of 
local government or Indian tribe was awarded such grant 
under subtitle A, in such manner, and accompanied by 
such information, as the Administrator, after consultation 
with the organization under section 223(f)(1) of the Juve-
nile Justice and Delinquency Prevention Act of 1974 (42 
U.S.C. 5633(f)(1)), may require. 
(b) CONTENTS OF APPLICATION.—Each application 
submitted under subsection (a) shall— 
(1) identify potential savings from criminal jus-
tice costs, public assistance costs, and other costs 
avoided by utilizing evidence-based and promising 
practices related to juvenile delinquency and crimi-
nal street gang activity prevention and intervention; 
(2) document— 
(A) investment in evidence-based and 
promising practices related to juvenile delin-
quency and criminal street gang activity preven-
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103 
tion and intervention to be provided by the unit 
of local government or Indian tribe; 
(B) the activities to be undertaken with 
the grants funds; 
(C) any expected efficiencies in the juvenile 
justice or other local systems to be attained as 
a result of implementation of the programs 
funded by the grant; and 
(D) outcomes from such activities, in 
terms of the expected numbers related to re-
duced criminal activity; 
(3) describe how savings sustained from invest-
ment in prevention and intervention practices will be 
reinvested in the continuing implementation of the 
PROMISE Plan; and 
(4) provide an assurance that the local fiscal 
contribution with respect to evidence-based and 
promising practices related to juvenile delinquency 
and criminal street gang activity prevention and 
intervention in the community for which the PROM-
ISE Coordinating Council was established for each 
year of the grant period will not be less than the 
local fiscal contribution with respect to such prac-
tices in the community for the year preceding the 
first year of the grant period. 
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104 
SEC. 532. GRANT AWARD GUIDELINES. 
(a) SELECTION AND DISTRIBUTION.—Grants award-
ed under this subtitle shall be awarded on a competitive 
basis. The Administrator shall— 
(1) take such steps as may be necessary to en-
sure that grants are awarded to units of local gov-
ernments and Indian tribes in areas with the highest 
concentrations of youth who are— 
(A) at-risk of involvement in juvenile delin-
quency or criminal street gang activity; and 
(B) involved in juvenile delinquency or 
street gang activity and who are at high-risk of 
continued involvement; and 
(2) give consideration to the need for grants to 
be awarded to units of local governments and Indian 
tribes in each region of the United States, and 
among urban, suburban, and rural areas. 
(b) EXTENSION OF GRANT AWARD.—The Adminis-
trator may extend the grant period under section 
530(b)(1) for a PROMISE Implementation grant to a unit 
of local government or an Indian tribe, in accordance with 
regulations issued by the Administrator. 
(c) RENEWAL OF GRANT AWARD.—Subject to the 
availability of appropriations, the Administrator may 
renew a PROMISE Implementation grant to a unit of 
local government or an Indian tribe to provide such unit 
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105 
or tribe with additional funds to continue implementation 
of a PROMISE Plan. Such a renewal— 
(1) shall be initiated by an application for re-
newal from a unit of local government or an Indian 
tribe; 
(2) shall be carried out in accordance with reg-
ulations issued by the Administrator; and 
(3) shall not be granted unless the Adminis-
trator determines such a renewal to be appropriate 
based on the results of the evaluation conducted 
under section 523(a) with respect to the community 
of such unit or tribe for which a PROMISE Coordi-
nating Council was established, and for which such 
unit or tribe is applying for renewal. 
SEC. 533. REPORTS. 
Not later than one year after the end of the grant 
period for which a unit of local government or an Indian 
tribe receives a PROMISE Implementation grant, and an-
nually thereafter for as long as such unit or tribe con-
tinues to receive Federal funding for a PROMISE Coordi-
nating Council, such unit or tribe shall report to the Ad-
ministrator regarding the use of Federal funds to imple-
ment the PROMISE Plan developed under subtitle A. 
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106 
SEC. 534. AUTHORIZATION OF APPROPRIATIONS. 
There are authorized to be appropriated to carry out 
this subtitle such sums as may be necessary for each of 
the fiscal years 2015 through 2017. 
Subtitle C—General PROMISE 
Grant Provisions 
SEC. 540. NONSUPPLANTING CLAUSE. 
A unit of local government or Indian tribe receiving 
a grant under this title shall use such grant only to supple-
ment, and not supplant, the amount of funds that, in the 
absence of such grant, would be available to address the 
needs of youth in the community with respect to evidence- 
based and promising practices related to juvenile delin-
quency and criminal street gang activity prevention and 
intervention. 
SEC. 541. GRANT APPLICATION REVIEW PANEL. 
The Administrator of the Office of Juvenile Justice 
and Delinquency Prevention, in conjunction with the 
PROMISE Advisory Panel, shall establish and utilize a 
transparent, reliable, and valid system for evaluating ap-
plications for PROMISE Assessment and Planning grants 
and for PROMISE Implementation grants, and shall de-
termine which applicants meet the criteria for funding, 
based primarily on a determination of greatest need (in 
accordance with section 402), with due consideration to 
other enumerated factors and the indicated ability of the 
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107 
applicant to successfully implement the program described 
in the application. 
SEC. 542. EVALUATION OF PROMISE GRANT PROGRAMS. 
Subject to the availability of appropriations under 
this title, the Administrator shall, in consultation with the 
organization provided assistance under section 223(f)(1) 
of the Juvenile Justice and Delinquency Prevention Act 
of 1974 (42 U.S.C. 5633(f)(1)), provide for an evaluation 
of the programs and activities carried out with grants 
under this title. In carrying out this section, the Adminis-
trator shall— 
(1) award grants to institutions of higher edu-
cation (including institutions that are eligible to re-
ceive funds under part F of title III of the Higher 
Education Act of 1965 (20 U.S.C. 1067q et seq.), 
to facilitate the evaluation process and measurement 
of achieved outcomes; 
(2) identify evidence-based and promising prac-
tices used by PROMISE Coordinating Councils 
under PROMISE Implementation grants that have 
proven to be effective in preventing involvement in, 
or diverting further involvement in, juvenile delin-
quency or criminal street gang activity; and 
(3) ensure— 
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108 
(A) that such evaluation is based on the 
performance standards that are developed by 
the PROMISE Advisory Panel in accordance 
with section 223(g) of the Juvenile Justice and 
Delinquency Prevention Act of 1974 (as added 
by section 401(b) of title IV of this division); 
(B) the development of longitudinal and 
clinical trial evaluation and performance meas-
urements with regard to the evidence-based and 
promising practices funded under this title; and 
(C) the dissemination of the practices iden-
tified in paragraph (2) to units of local govern-
ment and Indian tribes to promote the use of 
such practices by such units and tribes to pre-
vent involvement in, or to divert further involve-
ment in, juvenile delinquency or criminal street 
gang activity. 
DIVISION B—HOUSING 
TITLE VI—COMMON SENSE 
HOUSING INVESTMENT 
SEC. 601. CONGRESSIONAL FINDINGS. 
The Congress finds the following: 
(1) Two principal Federal housing goals are to 
increase the rate of home ownership and make rent-
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109 
al housing affordable for low-income families and in-
dividuals. 
(2) Much more progress has been achieved on 
the first goal than on the second goal. 
(3) The Federal Government devotes more than 
three times the amount of budgetary resources to 
supporting home ownership than it devotes to mak-
ing affordable rental housing available. 
(4) The burden of housing costs is more pro-
nounced among renters than among owners. 
(5) There is a shortage of more than 7 million 
homes affordable to families in the bottom 20 per-
cent of income, meaning that there are only 30 af-
fordable units for every 100 families. 
(6) Only one in four families that qualify for 
rental housing assistance receives benefits. 
(7) Housing assistance waiting lists can be 10 
years long and in many communities are closed. 
(8) The shortage of rental homes that are af-
fordable for extremely low-income households to be 
the principal cause of homelessness in the United 
States. 
(9) Public housing facilities in the United 
States have more than $26 billion in deferred main-
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110 
tenance after decades of neglect which results in a 
loss of 10,000 units each year. 
(10) The low-income housing tax credit success-
fully provides 100,000 units of affordable housing 
every year. 
(11) Every tax reform commission has rec-
ommended capping the mortgage interest deduction 
and converting it to a fairer and simpler credit. 
(12) More than 75 percent of the value of the 
mortgage interest deduction inures to the benefit of 
the top 20 percent of earners. 
(13) Fewer than half of tax filers with a home 
mortgage claim the mortgage interest deduction. 
(14) Only 9 percent of rural tax filers claim the 
mortgage interest deduction. 
(15) Ninety-six percent of homes sold between 
2005 and 2011 sold for less than $500,000. 
(16) A better approach that provides equitable 
benefits for families who buy homes, enables more 
low- and moderate-income homeowners to receive a 
benefit, and invests in affordable rental housing to 
assist those who used to be homeless or who have 
extremely or very low incomes is needed to strength-
en families and communities. 
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111 
SEC. 602. REPLACEMENT OF MORTGAGE INTEREST DEDUC-
TION WITH MORTGAGE INTEREST CREDIT. 
(a) NONREFUNDABLE CREDIT.—Subpart A of part 
IV of subchapter A of chapter 1 of the Internal Revenue 
Code of 1986 (relating to nonrefundable personal credits) 
is amended by inserting after section 25D the following 
new section: 
‘‘SEC. 25E. INTEREST ON INDEBTEDNESS SECURED BY 
QUALIFIED RESIDENCE. 
‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in-
dividual, there shall be allowed as a credit against the tax 
imposed by this chapter for the taxable year an amount 
equal to 15 percent of the qualified residence interest paid 
or accrued during the taxable year. 
‘‘(b) QUALIFIED RESIDENCE INTEREST.—For pur-
poses of this section— 
‘‘(1) IN GENERAL.—The term ‘qualified resi-
dence interest’ means interest which is paid or ac-
crued during the taxable year on— 
‘‘(A) acquisition indebtedness with respect 
to any qualified residence of the taxpayer, or 
‘‘(B) home equity indebtedness with re-
spect to any qualified residence of the taxpayer. 
For purposes of the preceding sentence, the deter-
mination of whether any property is a qualified resi-
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dence of the taxpayer shall be made as of the time 
the interest is accrued. 
‘‘(2) OVERALL
LIMITATION.—The aggregate 
amount of indebtedness taken into account for any 
period for purposes of this section shall not exceed 
$500,000 ($250,000 in the case of a married indi-
vidual filing a separate return). 
‘‘(3) ACQUISITION INDEBTEDNESS.—The term 
‘acquisition indebtedness’ means any indebtedness 
which— 
‘‘(A) is incurred in acquiring, constructing, 
or substantially improving any qualified resi-
dence of the taxpayer, and 
‘‘(B) is secured by such residence. 
Such term also includes any indebtedness secured by 
such residence resulting from the refinancing of in-
debtedness meeting the requirements of the pre-
ceding sentence (or this sentence), but only to the 
extent the amount of the indebtedness resulting 
from such refinancing does not exceed the amount of 
the refinanced indebtedness. 
‘‘(4) HOME EQUITY INDEBTEDNESS.— 
‘‘(A) IN GENERAL.—The term ‘home eq-
uity indebtedness’ means any indebtedness 
(other than acquisition indebtedness) secured 
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113 
by a qualified residence to the extent the aggre-
gate amount of such indebtedness does not ex-
ceed— 
‘‘(i) the fair market value of such 
qualified residence, reduced by 
‘‘(ii) the amount of acquisition indebt-
edness with respect to such residence. 
‘‘(B) LIMITATION.—The aggregate amount 
treated as home equity indebtedness for any pe-
riod shall not exceed $100,000 ($50,000 in the 
case of a married individual filing a separate re-
turn). 
‘‘(c) SPECIAL RULES.—For purposes of this sec-
tion— 
‘‘(1) QUALIFIED RESIDENCE.—The term ‘quali-
fied residence’ means— 
‘‘(A) the principal residence (within the 
meaning of section 121) of the taxpayer, and 
‘‘(B) 1 other residence of the taxpayer 
which is selected by the taxpayer for purposes 
of this subsection for the taxable year and 
which is used by the taxpayer as a residence 
(within the meaning of section 280A(d)(1)). 
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114 
‘‘(2) MARRIED INDIVIDUALS FILING SEPARATE 
RETURNS.—If a married couple does not file a joint 
return for the taxable year— 
‘‘(A) such couple shall be treated as 1 tax-
payer for purposes of paragraph (1), and 
‘‘(B) each individual shall be entitled to 
take into account 1 residence unless both indi-
viduals consent in writing to 1 individual taking 
into account the principal residence and 1 other 
residence. 
‘‘(3) RESIDENCE NOT RENTED.—For purposes 
of 
paragraph 
(1)(B), 
notwithstanding 
section 
280A(d)(1), if the taxpayer does not rent a dwelling 
unit at any time during a taxable year, such unit 
may be treated as a residence for such taxable year. 
‘‘(4) UNENFORCEABLE SECURITY INTERESTS.— 
Indebtedness shall not fail to be treated as secured 
by any property solely because, under any applicable 
State or local homestead or other debtor protection 
law in effect on August 16, 1986, the security inter-
est is ineffective or the enforceability of the security 
interest is restricted. 
‘‘(5) SPECIAL
RULES
FOR
ESTATES
AND 
TRUSTS.—For purposes of determining whether any 
interest paid or accrued by an estate or trust is 
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115 
qualified residence interest, any residence held by 
such estate or trust shall be treated as a qualified 
residence of such estate or trust if such estate or 
trust establishes that such residence is a qualified 
residence of a beneficiary who has a present interest 
in such estate or trust or an interest in the resid-
uary of such estate or trust. 
‘‘(d) COORDINATION WITH DEDUCTION.—In the case 
of any taxable year beginning in calendar years 2014 
through 2018, the taxpayer may elect to apply this section 
in lieu of the deduction under section 163 for qualified 
residence interest.’’. 
(b) PHASEOUT OF DEDUCTION.—Section 163(h) of 
such Code is amended by adding at the end the following 
new paragraph: 
‘‘(6) PHASEOUT.— 
‘‘(A) IN
GENERAL.—In the case of any 
taxable year beginning in a calendar year after 
2013, the amount otherwise allowable as a de-
duction by reason of paragraph (2)(D) shall be 
the applicable percentage of such amount. 
‘‘(B) 
APPLICABLE
PERCENTAGE.—For 
purposes of subparagraph (A), the applicable 
percentage shall be determined in accordance 
with the following table: 
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116 
‘‘For taxable years beginning in calendar year: 
The applicable 
percentage is: 
2014 ............................................................................................
100%
2015 ............................................................................................
80%
2016 ............................................................................................
60%
2017 ............................................................................................
40%
2018 ............................................................................................
20%
2019 and thereafter ....................................................................
0%.’’. 
(c) PHASEDOWN OF MORTGAGE LIMIT.—Subpara-
graph (B) of section 163(h)(3) of such Code is amended 
by adding at the end the following: 
‘‘(iii) PHASEDOWN.— 
‘‘(I) IN GENERAL.—In the case 
of any taxable year beginning in cal-
endar years 2014 through 2018, 
clause (ii) shall be applied by sub-
stituting the amounts specified in the 
table in subclause (II) of this clause 
for ‘$1,000,000’ and ‘$500,000’, re-
spectively. 
‘‘(II) PHASEDOWN
AMOUNTS.— 
For purposes of subclause (I), the 
amounts specified in this subclause 
for a taxable year shall be the 
amounts specified in the following 
table: 
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‘‘For taxable years beginning in calendar year: 
Amount 
substituted 
for 
$1,000,000: 
Amount 
substituted 
for 
$500,000: 
2014 ........................................................................
$1,000,000 
$500,000
2015 ........................................................................
$900,000 
$450,000
2016 ........................................................................
$800,000 
$400,000
2017 ........................................................................
$700,000 
$350,000
2018 ........................................................................
$600,000 
$300,000.’’. 
(d) CLERICAL AMENDMENT.—The table of sections 
for subpart A of part IV of subchapter A of chapter 1 
of such Code is amended by inserting after section 25D 
the following new item: 
‘‘Sec. 25E. Interest on indebtedness secured by qualified residence.’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply with respect to interest paid or 
accrued after December 31, 2013. 
SEC. 603. DEDUCTION ALLOWED FOR INTEREST AND TAXES 
RELATING TO LAND FOR DWELLING PUR-
POSES OWNED OR LEASED BY COOPERATIVE 
HOUSING CORPORATIONS. 
(a) IN GENERAL.—Subparagraph (B) of section 
216(b)(1) of the Internal Revenue Code of 1986 is amend-
ed by inserting ‘‘or land,’’ after ‘‘building,’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to amounts paid or accrued after 
December 31, 2012. 
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118 
SEC. 604. USE OF MORTGAGE INTEREST SAVINGS TO IN-
CREASE LOW-INCOME HOUSING TAX CREDIT. 
(a) 
IN
GENERAL.—Subclause 
(I) 
of 
section 
42(h)(3)(C)(ii) of the Internal Revenue Code of 1986 is 
amended by striking ‘‘$1.75 ($1.50 for 2001)’’ and insert-
ing ‘‘$2.70’’. 
(b) INFLATION ADJUSTMENT.—Subparagraph (H) of 
section 42(h)(3) of such Code is amended to read as fol-
lows: 
‘‘(H) COST-OF-LIVING ADJUSTMENT.— 
‘‘(i) IN GENERAL.—In the case of a 
calendar year after 2002, the $2,000,000 
amount in subparagraph (C) shall be in-
creased by an amount equal to— 
‘‘(I) such dollar amount, multi-
plied by 
‘‘(II) the cost-of-living adjust-
ment determined under section 1(f)(3) 
for such calendar year by substituting 
‘calendar year 2001’ for ‘calendar 
year 1992’ in subparagraph (B) there-
of. 
‘‘(ii) PER
CAPITA
AMOUNT.—In the 
case of a calendar year after 2014, the 
$2.70 amount in subparagraph (C) shall 
be increased by an amount equal to— 
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119 
‘‘(I) such dollar amount, multi-
plied by 
‘‘(II) the cost-of-living adjust-
ment determined under section 1(f)(3) 
for such calendar year by substituting 
‘calendar year 2013’ for ‘calendar 
year 1992’ in subparagraph (B) there-
of. 
‘‘(iii) ROUNDING.— 
‘‘(I) 
In 
the 
case 
of 
the 
$2,000,000 
amount, 
any 
increase 
under clause (i) which is not a mul-
tiple of $5,000 shall be rounded to the 
next lowest multiple of $5,000. 
‘‘(II) In the case of the $2.70 
amount, any increase under clause (ii) 
which is not a multiple of 5 cents 
shall be rounded to the next lowest 
multiple of 5 cents.’’. 
(c) 
ELIGIBLE
BASIS.—Clause 
(i) 
of 
section 
42(d)(5)(B) of such Code is amended by striking ‘‘and’’ 
at the end of subclause (I), by striking the period at the 
end of subclause (II) and inserting ‘‘, and’’, and by adding 
at the end the following: 
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