‘‘SEC. 25E. CREDIT FOR CERTAIN HOME PURCHASES. 
‘‘(a) ALLOWANCE OF CREDIT.— 
‘‘(1) IN GENERAL.—In the case of an individual 
who purchases a principal residence during the tax-
able year, there shall be allowed as a credit against 
the tax imposed by this chapter an amount equal to 
15 percent of the purchase price of the residence. 
‘‘(2) ALLOCATION OF CREDIT AMOUNT.—At the 
election of the taxpayer, the amount of the credit al-
lowed under paragraph (1) (after application of sub-
section (b)(1)) may be equally divided among the 2 
taxable years beginning with the taxable year in 
which the purchase of the principal residence is 
made. 
‘‘(b) LIMITATIONS.— 
‘‘(1) DOLLAR LIMITATION.—The amount of the 
credit allowed under paragraph (1) shall not exceed 
$18,000. 
‘‘(2) MARRIED
INDIVIDUALS
FILING
SEPA-
RATELY.—In the case of 2 married individuals filing 
separately, paragraph (1) shall be applied to each 
such individual by substituting ‘$7,500’ for ‘$9,000’. 
‘‘(3) OTHER INDIVIDUALS.—If 2 or more indi-
viduals who are not married purchase a principal 
residence, the amount of the credit allowed under 
subsection (a) shall be allocated among such individ-
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uals in such manner as the Secretary may prescribe, 
except that the total amount of the credits allowed 
to all such individuals shall not exceed $18,000. 
‘‘(4) ONE-TIME ONLY.— 
‘‘(A) IN GENERAL.—If a credit is allowed 
under this section in the case of any individual 
(and such individual’s spouse, if married) with 
respect to the purchase of any principal resi-
dence, no credit shall be allowed under this sec-
tion in any taxable year with respect to the pur-
chase of any other principal residence by such 
individual or a spouse of such individual. 
‘‘(B) JOINT PURCHASE.—In the case of a 
purchase of a principal residence by or more 
unmarried individuals or by 2 married individ-
uals filing separately, no credit shall be allowed 
under this section if a credit under this section 
has been allowed to any of such individuals in 
any taxable year with respect to the purchase of 
any other principal residence. 
‘‘(5) LIMITATION
BASED
ON
MODIFIED
AD-
JUSTED GROSS INCOME.— 
‘‘(A) IN GENERAL.—The amount allowable 
as a credit under subsection (a) (determined 
without regard to this paragraph) for the tax-
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able year shall be reduced (but not below zero) 
by the amount which bears the same ratio to 
the amount which is so allowable as— 
‘‘(i) the excess (if any) of— 
‘‘(I) the taxpayer’s modified ad-
justed gross income for such taxable 
year, over 
‘‘(II) $150,000 ($300,000 in the 
case of a joint return), bears to 
‘‘(ii) $75,000. 
‘‘(B) MODIFIED
ADJUSTED
GROSS
IN-
COME.—For purposes of subparagraph (A), the 
term ‘modified adjusted gross income’ means 
the adjusted gross income of the taxpayer for 
the taxable year increased by any amount ex-
cluded from gross income under section 911, 
931, or 933. 
‘‘(c) RECAPTURE OF CREDIT IN THE CASE OF CER-
TAIN DISPOSITIONS.— 
‘‘(1) IN GENERAL.—In the event that a tax-
payer— 
‘‘(A) disposes of the principal residence 
with respect to which a credit was allowed 
under subsection (a), or 
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‘‘(B) fails to occupy such residence as the 
taxpayer’s principal residence, 
at any time within 60 months after the date on 
which the taxpayer purchased such residence, then 
the tax imposed by this chapter for the taxable year 
during which such disposition occurred or in which 
the taxpayer failed to occupy the residence as a prin-
cipal residence shall be increased by the amount of 
such credit. 
‘‘(2) EXCEPTIONS.— 
‘‘(A) DEATH
OF
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 within the 2-year period begin-
ning on the date of the disposition or cessation 
referred to in such paragraph. Paragraph (1) 
shall apply to such new principal residence dur-
ing the remainder of the 60-month period de-
scribed in such paragraph as if such new prin-
cipal residence were the converted residence. 
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‘‘(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) RELOCATION OF MEMBERS OF THE 
ARMED
FORCES.—Paragraph (1) shall not 
apply in the case of a member of the Armed 
Forces of the United States on active duty who 
moves pursuant to a military order and incident 
to a permanent change of station. 
‘‘(3) 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. 
‘‘(4) RETURN REQUIREMENT.—If the tax im-
posed by this chapter for the taxable year is in-
creased under this subsection, the taxpayer shall, 
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notwithstanding section 6012, be required to file a 
return with respect to the taxes imposed under this 
subtitle. 
‘‘(d) LIMITATION BASED ON AMOUNT OF TAX.—In 
the case of a taxable year to which section 26(a)(2) does 
not apply, the credit allowed under subsection (a) for any 
taxable year shall not exceed the excess of— 
‘‘(1) the sum of the regular tax liability (as de-
fined in section 26(b)) plus the tax imposed by sec-
tion 55, over 
‘‘(2) the sum of the credits allowable under this 
subpart (other than this section) for the taxable 
year. 
‘‘(e) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section— 
‘‘(1) PRINCIPAL RESIDENCE.—The term ‘prin-
cipal residence’ has the same meaning as when used 
in section 121. 
‘‘(2) PURCHASE.—In defining the purchase of a 
principal residence, rules similar to the rules of 
paragraphs (2) and (3) of section 1400C(e) (as in 
effect on the date of the enactment of this section) 
shall apply. 
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