I
107TH CONGRESS
1ST SESSION
H. R. 211
To amend the Internal Revenue Code of 1986 to allow a credit against
income tax for the purchase of a principal residence by a first-time
homebuyer.
IN THE HOUSE OF REPRESENTATIVES
JANUARY 3, 2001
Mr. SWEENEY 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 allow a
credit against income tax for the purchase of a principal
residence by a first-time homebuyer.
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 ‘‘First-Time Homebuyer
Tax Credit Act of 2001’’.
SEC. 2. CREDIT FOR FIRST-TIME HOMEBUYERS.
(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. PURCHASE OF PRINCIPAL RESIDENCE BY FIRST-
TIME HOMEBUYER.
‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in-
dividual who is a first-time homebuyer of a principal resi-
dence in the United States during any taxable year, there
shall be allowed as a credit against the tax imposed by
this chapter for the taxable year an amount equal to 10
percent of the purchase price of the residence.
‘‘(b) LIMITATIONS.—
‘‘(1) MAXIMUM
CREDIT.—The credit allowed
under subsection (a) shall not exceed $5,000.
‘‘(2) MARRIED INDIVIDUALS FILING JOINTLY.—
In the case of a husband and wife who file a joint
return, the credit under this section is allowable only
if both the husband and wife are first-time home-
buyers, and the amount specified under paragraph
(1) shall apply to the joint return.
‘‘(3) MARRIED
INDIVIDUALS
FILING
SEPA-
RATELY.—In the case of a married individual filing
a separate return, the credit under this section is al-
lowable only if the individual is a first-time home-
buyer, and subsection (a) shall be applied by sub-
stituting ‘$2,500’ for ‘$5,000’.
‘‘(4) OTHER TAXPAYERS.—In the case that 2 or
more individuals who are not married purchase a
principal residence together—
‘‘(A) the credit under this section is allow-
able only if each of the individuals is a first-
time homebuyer, and
‘‘(B) the amount of the credit allowed
under subsection (a) shall be allocated among
such individuals in such manner as the Sec-
retary may prescribe, except that the total
amount of the credits allowed to all such indi-
viduals shall not exceed $5,000.
‘‘(5) YEAR
FOR
WHICH
CREDIT
ALLOWED.—
Fifty percent of the credit allowed by subsection (a)
shall be allowed in the taxable year in which the res-
idence is purchased and the remaining fifty percent
of the credit shall be allowed in the succeeding tax-
able year.
‘‘(c) DEFINITIONS.—For purposes of this section—
‘‘(1) FIRST-TIME HOMEBUYER.—
‘‘(A) IN GENERAL.—The term ‘first-time
homebuyer’ has the same meaning as when
used in section 72(t)(8)(D)(i), except that ‘3-
year period’ shall be substituted for ‘2-year pe-
riod’ in subclause (I) thereof.
‘‘(B) ONE-TIME
ONLY.—Except as pro-
vided in subsection (f), if an individual is treat-
ed as a first-time homebuyer with respect to
any principal residence, such individual may not
be treated as a first-time homebuyer with re-
spect to any other principal residence.
‘‘(2) PRINCIPAL RESIDENCE.—The term ‘prin-
cipal residence’ has the same meaning as when used
in section 121. An interest in a partnership, S cor-
poration, or trust that owns an interest in a resi-
dence is not considered an interest in a residence for
purposes of this paragraph except as may be pro-
vided in regulations.
‘‘(3) PURCHASE.—
‘‘(A) IN GENERAL.—The term ‘purchase’
means any acquisition, but only if—
‘‘(i) the property is not acquired from
a person whose relationship to the person
acquiring it would result in the disallow-
ance of losses under section 267 or 707(b)
(but, in applying sections 267 (b) and (c)
for purposes of this section, paragraph (4)
of section 267(c) shall be treated as pro-
viding that the family of an individual shall
include only his spouse, ancestors, and lin-
eal descendants), and
‘‘(ii) the basis of the property in the
hands of the person acquiring such prop-
erty is not determined—
‘‘(I) in whole or in part by ref-
erence to the adjusted basis of such
property in the hands of the person
from whom acquired, or
‘‘(II) under section 1014(a) (re-
lating to property acquired from a de-
cedent).
‘‘(B) CONSTRUCTION.—A residence which
is constructed by the taxpayer shall be treated
as purchased by the taxpayer.
‘‘(4) PURCHASE
PRICE.—The term ‘purchase
price’ means the adjusted basis of the principal resi-
dence on the date of acquisition (within the meaning
of section 72(t)(8)(D)(iii)).
‘‘(d) CARRYFORWARD OF UNUSED CREDITS.—If the
credit allowable under subsection (a) for any taxable year
exceeds the limitation imposed by section 26(a) for such
taxable year reduced by the sum of the credits allowable
under this subpart (other than this section and section
23), such excess shall be carried to the succeeding taxable
year and added to the credit allowable under subsection
(a) for such taxable year. No credit may be carried for-
ward under this subsection to any taxable year following
the fifth taxable year after the taxable year in which the
residence is purchased. For purposes of the preceding sen-
tence, credits shall be treated as used on a first-in first-
out basis.
‘‘(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)(5) shall not apply.
‘‘(f) RECAPTURE FOR CERTAIN DISPOSITIONS.—
‘‘(1) IN GENERAL.—Except as provided in para-
graphs (2) and (3), if the taxpayer disposes of prop-
erty with respect to the purchase of which a credit
was allowed under subsection (a) at any time within
36 months after the date the taxpayer acquired the
property as his principal residence, then the tax im-
posed under this chapter for the taxable year in
which the disposition occurs is increased by an
amount equal to the amount allowed as a credit for
the purchase of such property.
‘‘(2) ACQUISITION OF NEW RESIDENCE.—If, in
connection with a disposition described in paragraph
(1) and within the 2-year period beginning on the
date of such disposition, the taxpayer purchases a
new principal residence—
‘‘(A) paragraph (1) shall not apply, and
‘‘(B) the tax imposed by this chapter for
the taxable year in which the new principal resi-
dence is purchased is increased by an amount
equal to—
‘‘(i) the amount of credit claimed by
the taxpayer under this section, reduced
(but not below zero) by
‘‘(ii) the amount of the credit that
could be claimed under this section on the
purchase of the new residence.
‘‘(3) DEATH OF OWNER; CASUALTY LOSS; IN-
VOLUNTARY CONVERSION; ETC.—The provisions of
paragraph (1) do not apply to—
‘‘(A) a disposition of a residence made on
account of the death of any individual having a
legal or equitable interest therein occurring dur-
ing the 36-month period to which reference is
made under paragraph (1),
‘‘(B) a disposition of the old residence if it
is substantially or completely destroyed by a
casualty described in section 165(c)(3) or
compulsorily or involuntarily converted (within
the meaning of section 1033(a)), or
‘‘(C) a disposition pursuant to a settlement
in a divorce or legal separation proceeding
where the residence is sold or the other spouse
retains the residence as a principal residence.
‘‘(g) DENIAL OF DOUBLE BENEFIT.—No credit shall
be allowed under subsection (a) for any expense—
‘‘(1) for which a deduction or credit is allowed
under any other provision of this chapter, or
‘‘(2) to the extent that the aggregate of such
expenses does not exceed qualified first-time home-
buyer distributions (as defined by section 72(t)(8)
made with respect to the principle residence.
‘‘(h) BASIS ADJUSTMENT.—For purposes of this sub-
title, if a credit is allowed under this section with respect
to the purchase of any residence, the basis of such resi-
dence shall be reduced by the amount of the credit so al-
lowed.
‘‘(i) PROPERTY TO WHICH SECTION APPLIES.—
‘‘(1) IN GENERAL.—The provisions of this sec-
tion apply to a principal residence if—
‘‘(A) the taxpayer acquires the residence
on or after January 1, 2001, and before Janu-
ary 1, 2003, or
‘‘(B) the taxpayer enters into, on or after
January 1, 2001, and before January 1, 2003,
a binding contract to acquire the residence, and
acquires and occupies the residence before July
1, 2003.’’.
(b) CONFORMING AMENDMENT.—Subsection (a) of
section 1016 of such Code (relating to general rule for
adjustments to basis) is amended by striking ‘‘and’’ at the
end of paragraph (26), by striking the period at the end
of paragraph (27) and inserting ‘‘, and’’, and by adding
at the end thereof the following new paragraph:
‘‘(28) in the case of a residence with respect to
which a credit was allowed under section 25B, to the
extent provided in section 25B(h).’’.
(c) 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. Purchase of principal residence by first-time home-
buyer.’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall take effect on January 1, 2001.
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