‘‘(2) a deduction under section 151 with respect 
to such taxpayer is allowable to another taxpayer for 
such taxable year, or 
‘‘(3) the taxpayer fails to attach to the return 
of tax for such taxable year a properly executed copy 
of the settlement statement used to complete such 
purchase. 
‘‘(e) REPORTING.—If the Secretary requires informa-
tion reporting under section 6045 by a person described 
in subsection (e)(2) thereof to verify the eligibility of tax-
payers for the credit allowable by this section, the excep-
tion provided by section 6045(e) shall not apply. 
‘‘(f) RECAPTURE OF CREDIT.— 
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in this subsection, if, during any taxable year 
before the close of the recapture period, a taxpayer 
disposes of the principal residence with respect to 
which a credit was allowed under subsection (a) (or 
such residence ceases to be the principal residence of 
the taxpayer), the tax imposed by this chapter for 
such taxable year shall be increased by the recover-
able amount determined in paragraph (2). 
‘‘(2) RECOVERABLE AMOUNT.—For purposes of 
paragraph (1), the recoverable amount is the prod-
uct of— 
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‘‘(A) 25 percent of the amount of the cred-
it allowed under subsection (a), multiplied by 
‘‘(B) the number of taxable years remain-
ing in the recapture period as of the beginning 
of the taxable year in which the taxpayer dis-
poses of the principal residence. 
‘‘(3) LIMITATION BASED ON GAIN.—In the case 
of the sale of the principal residence to a person who 
is not related to the taxpayer, the increase in tax de-
termined under paragraph (1) shall not exceed the 
amount of gain (if any) on such sale. Solely for pur-
poses of the preceding sentence, the adjusted basis 
of such residence shall be reduced by the amount of 
the credit allowed under subsection (a). 
‘‘(4) EXCEPTIONS.— 
‘‘(A) DEATH OF A TAXPAYER.—Paragraph 
(1) shall not apply to any taxable year ending 
after the date of the taxpayer’s death. 
‘‘(B) INVOLUNTARY
CONVERSION.—Para-
graph (1) shall not apply in the case of a resi-
dence which is compulsorily or involuntarily 
converted (within the meaning of section 
1033(a)) if the taxpayer acquires a new prin-
cipal residence during the 2-year period begin-
ning on the date of the disposition or cessation 
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referred to in paragraph (1). Paragraph (1) 
shall apply to such new principal residence dur-
ing the recapture period in the same manner as 
if such new principal residence were the con-
verted residence. 
‘‘(C) TRANSFERS BETWEEN SPOUSES OR 
INCIDENT TO DIVORCE.—In the case of a trans-
fer of a residence to which section 1041(a) ap-
plies— 
‘‘(i) paragraph (1) shall not apply to 
such transfer, and 
‘‘(ii) in the case of taxable years end-
ing after such transfer, paragraph (1) shall 
apply to the transferee in the same manner 
as if such transferee were the transferor 
(and shall not apply to the transferor). 
‘‘(D) SPECIAL
RULE
FOR
MEMBERS
OF 
THE ARMED FORCES, ETC.— 
‘‘(i) IN GENERAL.—In the case of the 
disposition of a principal residence by an 
individual (or a cessation referred to in 
paragraph (1)) after December 31, 2021, 
in connection with Government orders re-
ceived by such individual, or such individ-
ual’s spouse, for qualified official extended 
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duty service, paragraph (1) and subsection 
(d)(2) shall not apply to such disposition 
(or cessation). 
‘‘(ii) QUALIFIED OFFICIAL EXTENDED 
DUTY SERVICE.—For purposes of this sec-
tion, the term ‘qualified official extended 
duty service’ means service on qualified of-
ficial extended duty as— 
‘‘(I) a member of the uniformed 
services, 
‘‘(II) a member of the Foreign 
Service of the United States, or 
‘‘(III) an employee of the intel-
ligence community. 
‘‘(iii) DEFINITIONS.—Any term used 
in this subparagraph which is also used in 
paragraph (9) of section 121(d) shall have 
the same meaning as when used in such 
paragraph. 
‘‘(E) DISPOSITION OF RESIDENCE IN CON-
NECTION WITH CHANGE OF EMPLOYMENT.—In 
the case of the disposition of a principal resi-
dence by an individual (or a cessation referred 
to in paragraph (1)) after December 31, 2021 
in connection with a change of employment 
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which meets the conditions described in section 
217(c), paragraph (1) shall not apply to such 
disposition (or cessation). 
‘‘(5) JOINT RETURNS.—In the case of a credit 
allowed under subsection (a) with respect to a joint 
return, half of such credit shall be treated as having 
been allowed to each individual filing such return for 
purposes of this subsection. 
‘‘(6) RETURN REQUIREMENT.—If the tax im-
posed by this chapter for the taxable year is in-
creased under this subsection, the taxpayer shall, 
notwithstanding section 6012, be required to file a 
return with respect to the taxes imposed under this 
subtitle. 
‘‘(7) RECAPTURE
PERIOD.—For purposes of 
this subsection, the term ‘recapture period’ means 
the 4 taxable years beginning with the taxable year 
in which the purchase of the principal residence for 
which a credit is allowed under subsection (a) was 
made. 
‘‘(g) ELECTION TO TREAT PURCHASE
IN PRIOR 
YEAR.—In the case of a purchase of a principal residence 
after December 31, 2022, a taxpayer may elect to treat 
such purchase as made on December 31 of the calendar 
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year preceding such purchase for purposes of this section 
(other than subsections (b)(4), (c), and (h)). 
‘‘(h) TRANSFER OF CREDIT.— 
‘‘(1) IN GENERAL.—Subject to such regulations 
and other guidance as the Secretary determines nec-
essary, a taxpayer may elect that the credit which 
would (but for this subsection) be allowed to such 
taxpayer with respect to the purchase of a principal 
residence shall be allowed to the mortgage lender 
with respect to such purchase and not to such tax-
payer. 
‘‘(2) ELIGIBLE ENTITY.—For purposes of this 
subsection, the term ‘eligible entity’ means, with re-
spect to the purchase of the principal residence for 
which the credit is allowed under subsection (a), the 
mortgage lender which provides the mortgage to the 
taxpayer and has— 
‘‘(A) registered with the Secretary for pur-
poses of this paragraph, at such time, and in 
such form and manner, as the Secretary may 
prescribe, 
‘‘(B) prior to the election described in 
paragraph (1) and not later than at the time of 
such purchase, disclosed to the taxpayer making 
such purchase— 
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