I
107TH CONGRESS
1ST SESSION
H. R. 2176
To amend the Internal Revenue Code of 1986 to provide disaster relief
for homeowners.
IN THE HOUSE OF REPRESENTATIVES
JUNE 14, 2001
Mr. BAIRD (for himself and Mr. ANDREWS) 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 provide
disaster relief for homeowners.
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 ‘‘Disaster Burden Relief
Act of 2001’’.
SEC. 2. CREDIT FOR MORTGAGE PAYMENTS MADE ON DE-
STROYED HOME.
(a) IN GENERAL.—Subpart A of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of
1986 (relating to nonrefundable personal credits) is
amended by inserting after section 25A the following new
section:
‘‘SEC. 25B. MORTGAGE PAYMENTS MADE ON DESTROYED
HOME.
‘‘(a) IN GENERAL.—In the case of an individual,
there shall be allowed as a credit against the tax imposed
by this chapter for the taxable year an amount equal to
the payments made during the taxable year on acquisition
indebtedness (as defined in section 163(h)(3)(B)) secured
by a qualified destroyed home.
‘‘(b) QUALIFIED DESTROYED HOME.—For purposes
of this section, the term ‘qualified destroyed home’ means
any residence if—
‘‘(1) such residence is substantially destroyed as
a result of a disaster which is a Presidentially de-
clared disaster (as defined in section 1033(h)) or a
disaster which is declared by the chief executive offi-
cer of the State in which such residence is located,
‘‘(2) such residence was the principal residence
(within the meaning of section 121) of the taxpayer
at the time of its destruction,
‘‘(3) because of the high risk of the occurrence
of the type of disaster which substantially destroyed
such residence, insurance covering damage resulting
from such a disaster was unavailable at reasonable
rates, and
‘‘(4) such destruction is not compensated for by
insurance or otherwise.
‘‘(c) SPECIAL RULES.—
‘‘(1) COORDINATION WITH INTEREST DEDUC-
TION.—The deduction which would (but for this sub-
section) be allowed on the indebtedness referred to
in subsection (a) shall be reduced by the credit al-
lowed under this section.
‘‘(2) CREDIT ONLY FOR PAYMENT DUE AFTER
DESTRUCTION.—Subsection (a) shall not apply to
any amount first due before the date of the disaster.
‘‘(3) BENEFIT
REDUCED
BY
GOVERNMENT
GRANTS.—
‘‘(A) IN GENERAL.—If any grant is pro-
vided to the taxpayer under any Federal, State,
or local government program by reason of the
destruction of the residence—
‘‘(i) subsection (b)(4) shall be applied
without regard to such grant, but
‘‘(ii) the credit which would (but for
this paragraph) be allowed under this sec-
tion for any taxable year shall be reduced
by such taxable year’s ratable portion of
such grant.
‘‘(B) RATABLE
PORTION.—The ratable
portion of a grant shall be determined by allo-
cating such grant ratably over the reasonably
expected remaining period that payments on the
mortgage will be required to be made.
‘‘(d) ELECTION NOT TO HAVE CREDIT APPLY.—
This section shall not apply to a taxpayer for a taxable
year if the taxpayer elects not to have this section apply
for such year.’’
(b) 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 the item relat-
ing to section 25A the following new item:
‘‘Sec. 25B. Mortgage payments made on destroyed home.’’
(c) EFFECTIVE DATE.—The amendments made by
this section apply to with respect to disasters occurring
on or after January 1, 2000.
SEC. 3. NO INCOME FROM DISCHARGE OF INDEBTEDNESS
OF DESTROYED HOME.
(a) IN GENERAL.—Subsection (a) of section 108 of
the Internal Revenue Code of 1986 (relating to income
from discharge of indebtedness) is amended by adding at
the end the following new paragraph:
‘‘(4) EXCEPTION FOR HOMES DESTROYED IN
PRESIDENTIALLY
DECLARED
DISASTERS.—Para-
graph (1) shall not apply to any discharge of acqui-
sition 
indebtedness 
(as 
defined 
in 
section
163(h)(3)(B)) secured by a qualified destroyed home
(as defined in section 25B(b)).’’
(b) EFFECTIVE DATE.—The amendment made by
this section apply to with respect to disasters occurring
on or after January 1, 2000.
SEC. 4. LOSS DEDUCTION ON DESTROYED HOME DETER-
MINED AS IF BASIS EQUALED FAIR MARKET
VALUE PRIOR TO DESTRUCTION.
(a) IN GENERAL.—Subsection (c) of section 165 of
the Internal Revenue Code of 1986 (relating to limitation
on losses of individuals) is amended by adding at the end
the following new sentence:
‘‘If the loss referred to in paragraph (3) is of a qualified
destroyed home (as defined in section 25B(b)) and the
taxpayer irrevocably elects not to claim the benefits of sec-
tion 25B with respect to such home, the amount of the
loss sustained shall be determined as if the adjusted basis
of the home equaled its fair market value immediately be-
fore its destruction.’’.
(b) EFFECTIVE DATE.—The amendment made by
this section apply to with respect to disasters occurring
on or after January 1, 2000.
SEC. 5. LOSS ON SALE OR EXCHANGE OF PRINCIPAL RESI-
DENCE LOCATED IN PRESIDENTIALLY DE-
CLARED DISASTER AREA.
(a) IN GENERAL.—Subsection (c) of section 165 of
the Internal Revenue Code of 1986 (relating to limitation
on losses of individuals) is amended by striking ‘‘and’’ at
the end of paragraph (2), by striking the period at the
end of paragraph (3) and inserting ‘‘; and’’, and by insert-
ing after paragraph (3) the following new paragraph:
‘‘(4) losses arising from the sale or exchange of
the principal residence (within the meaning of sec-
tion 121) of the taxpayer if—
‘‘(A) such residence is located in an area—
‘‘(i) which was at any time determined
by the President to warrant assistance by
the Federal Government under the Robert
T. Stafford Disaster Relief and Emergency
Assistance Act, or
‘‘(ii) which was at any time declared
a disaster area by the chief executive offi-
cer of the State in which such residence is
located,
‘‘(B) such residence was acquired by the
taxpayer on or before the date of the occurrence
of the disaster for which such determination or
declaration was made, and
‘‘(C) because of the high risk of the reoc-
currence of the type of disaster for which such
determination or declaration was made, insur-
ance covering damage resulting from such a
disaster was unavailable at reasonable rates.’’
(b) LIMITATION ON LOSSES NOT TO APPLY.—Sub-
section (b) of section 1211 of such Code is amended by
adding at the end the following new flush sentence:
‘‘The preceding sentence shall not apply to a loss described
in section 165(c)(4).’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to sales and exchanges on or after
January 1, 2000.
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