I 
111TH CONGRESS 
1ST SESSION H. R. 1784 
To amend the Internal Revenue Code of 1986 to encourage the purchase 
of residential property by providing an exclusion from tax on certain gains. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 30, 2009 
Mr. POLIS of Colorado 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 encourage 
the purchase of residential property by providing an ex-
clusion from tax on certain gains. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Investment Property 
Opportunity Act of 2009’’. 
SEC. 2. EXCLUSION OF CERTAIN CAPITAL GAINS ON RESI-
DENTIAL PROPERTY. 
(a) IN GENERAL.—Part III of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 is amended 
by inserting after section 139C the following new section: 
VerDate Nov 24 2008 
20:50 Mar 31, 2009
Jkt 079200
PO 00000
Frm 00001
Fmt 6652
Sfmt 6201
E:\BILLS\H1784.IH
H1784
mstockstill on PROD1PC66 with BILLS
‘‘SEC. 139D. CAPITAL GAINS ON CERTAIN RESIDENTIAL 
PROPERTY. 
‘‘(a) IN GENERAL.—Gross income shall not include 
gain from the sale of real property consisting predomi-
nantly of residential property if— 
‘‘(1) such property is located in a distressed 
housing area, 
‘‘(2) such property is acquired by purchase (as 
defined in section 179(d)(2)) during the 18-month 
period beginning on the date of the enactment of 
this section, and 
‘‘(3) such property is held for more than 3 
years. 
‘‘(b) DISTRESSED HOUSING AREA.—For purposes of 
this section, the term ‘distressed housing area’ means any 
county which is designated by the Secretary as having, 
with respect to residential housing located in such coun-
ty— 
‘‘(1) a mortgage foreclosure rate during 2008 
which was 110 percent or more of the national aver-
age of such rate, 
‘‘(2) a decline during 2008 in the average fair 
market value of such housing of at least 20 percent, 
or 
‘‘(3) more than 50 percent of the loans which 
are secured by such housing as having a loan to 
VerDate Nov 24 2008 
20:50 Mar 31, 2009
Jkt 079200
PO 00000
Frm 00002
Fmt 6652
Sfmt 6201
E:\BILLS\H1784.IH
H1784
mstockstill on PROD1PC66 with BILLS
value ratio of greater than 80 percent (determined 
as of the end of 2008). 
‘‘(c) EXCEPTION FOR SALES BETWEEN RELATED 
PERSONS.— 
‘‘(1) IN
GENERAL.—Subsection (a) shall not 
apply to any sale between related persons. 
‘‘(2) RELATED PERSONS.—For purposes of this 
subsection, a person shall be treated as related to 
another person if the relationship between such per-
sons would result in a disallowance of losses under 
section 267 or 707(b).’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for part III of subchapter B of chapter 1 of such Code 
is amended by inserting after the item relating to section 
139C the following new item: 
‘‘Sec. 139D. Capital gains on certain residential property.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to property purchased after the 
date of the enactment of this section. 
Æ 
VerDate Nov 24 2008 
20:50 Mar 31, 2009
Jkt 079200
PO 00000
Frm 00003
Fmt 6652
Sfmt 6301
E:\BILLS\H1784.IH
H1784
mstockstill on PROD1PC66 with BILLS