I
107TH CONGRESS
1ST SESSION
H. R. 2338
To amend the Internal Revenue Code of 1986 to allow a refundable credit
against the income tax for the amount paid in rent in excess of 30
percent of income.
IN THE HOUSE OF REPRESENTATIVES
JUNE 27, 2001
Mr. ENGEL (for himself, Ms. EDDIE BERNICE JOHNSON of Texas, Mr. FIL-
NER, Mr. LANTOS, Mr. HINCHEY, Mr. JACKSON of Illinois, Mr. PAYNE,
Mr. NADLER, Ms. MCKINNEY, Mr. PASCRELL, Mr. OWENS, Mr.
SERRANO, Mr. PALLONE, Ms. WATERS, Mr. KUCINICH, Mr. TOWNS, Mr.
SANDERS, Mr. MEEKS of New York, and Mr. HONDA) introduced the fol-
lowing bill; which was referred to the Committee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to allow a
refundable credit against the income tax for the amount
paid in rent in excess of 30 percent of income.
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 ‘‘Renters Relief Act of
2001’’.
SEC. 2. REFUNDABLE CREDIT FOR RENT IN EXCESS OF 30
PERCENT OF INCOME.
(a) IN GENERAL.—Subpart C of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of
1986 (relating to refundable credits) is amended by redes-
ignating section 35 as section 36 and by inserting after
section 34 the following new section:
‘‘SEC. 35. CREDIT FOR RENT IN EXCESS OF 30 PERCENT OF
INCOME.
‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in-
dividual, there shall be allowed as a credit against the tax
imposed by this chapter for the taxable year an amount
equal to the excess rent amount paid by the taxpayer dur-
ing the taxable year.
‘‘(b) LIMITATIONS.—
‘‘(1) DOLLAR LIMITATION.—The amount of the
credit allowable under subsection (a) for a taxable
year shall be not exceed $2,500.
‘‘(2) PHASEOUT.—
‘‘(A) IN GENERAL.—For purposes of this
section, the $2,500 amount referred to in para-
graph (1) shall be reduced (but not below zero)
by an amount equal to $25 multiplied by the
number of percentage points (or fraction there-
of) by which the taxpayer’s modified adjusted
gross income for the taxable year exceeds 80
percent of the area median income applicable to
such taxpayer based on family size.
‘‘(3) SPECIAL RULE FOR TAXPAYERS SUBJECT
TO MORE THAN ONE AREA MEDIAN INCOME IN A
TAXABLE YEAR.—For purposes of paragraph (2), in
the case of a taxpayer who is subject to more than
1 area median income in the taxable year by reason
of changes in family size or location of personal resi-
dence, the area median income applicable to such
taxpayer—
‘‘(A)(i) shall be determined as of the first
day of each month on the basis of such family
size and location, and
‘‘(ii) shall be 1⁄12 of the area median in-
come so applicable, and
‘‘(B) shall be the aggregate of the amounts
determined under subparagraph (A) for each
month of the taxable year.
‘‘(4) AREA MEDIAN INCOME.—For purposes of
this subsection, the term ‘area median income’
means area median income as determined by the
Secretary of Housing and Urban Development for
purposes of the United States Housing Act of 1937
(42 U.S.C. 1437 et seq.).
‘‘(c) EXCESS RENT AMOUNT.—For purposes of this
section—
‘‘(1) IN
GENERAL.—The term ‘excess rent
amount’ means the excess (if any) of—
‘‘(A) the amount paid by the taxpayer for
rent of a principal residence, over
‘‘(B) 30 percent of the modified adjusted
gross income of the taxpayer.
‘‘(2) MODIFIED ADJUSTED GROSS INCOME.—
‘‘(A) IN
GENERAL.—The term ‘modified
adjusted gross income’ means adjusted gross
income—
‘‘(i) determined—
‘‘(I) without regard to sections
86, 219, 221, 911, 931, and 933,
‘‘(II) without regard to the
amounts described in subparagraph
(B), and
‘‘(ii) increased by the amounts de-
scribed in subparagraph (C).
‘‘(B) CERTAIN AMOUNTS DISREGARDED.—
An amount is described in this subparagraph if
it is—
‘‘(i) an alimony or separate mainte-
nance payment (as defined in section
71(b)),
‘‘(ii) the amount of losses from sales
or exchanges of capital assets in excess of
gains from such sales or exchanges to the
extent such amount does not exceed the
amount under section 1211(b)(1),
‘‘(iii) the net loss from estates and
trusts,
‘‘(iv) the excess (if any) of amounts
described in section 32(i)(2)(C)(ii) over the
amounts described in section 32(i)(2)(C)(i)
(relating to nonbusiness rents and royal-
ties), or
‘‘(v) 75 percent of the net loss from
the carrying on of trades or businesses,
computed separately with respect to—
‘‘(I) trades or businesses (other
than farming) conducted as sole pro-
prietorships,
‘‘(II) trades or businesses of
farming conducted as sole proprietor-
ships, and
‘‘(III) other trades or businesses.
For purposes of clause (v), there shall not be
taken into account items which are attributable
to a trade or business which consists of the per-
formance of services by the taxpayer as an em-
ployee.
‘‘(C) CERTAIN AMOUNTS INCLUDED.—An
amount is described in this subparagraph if it
is—
‘‘(i) interest received or accrued dur-
ing the taxable year which is exempt from
tax imposed by this chapter,
‘‘(ii) amounts received as a pension or
annuity, and any distributions or payments
received from an individual retirement
plan, by the taxpayer during the taxable
year to the extent not included in gross in-
come,
‘‘(iii) amount received under, or paid
on behalf of the taxpayer under, any pro-
gram receiving Federal, State, or local gov-
ernment funds if eligibility for, or the
amount or type of, benefits or assistance
under the program is based, in whole or in
part, on need, or
‘‘(iv) the amount of social security
benefits (as defined in section 86(d)) re-
ceived during the taxable year.
Clause (ii) shall not include any amount which
is not includible in gross income by reason of
a trustee-to-trustee transfer or a rollover dis-
tribution.
‘‘(d) OTHER DEFINITIONS AND SPECIAL RULES.—
For purposes of this section—
‘‘(1) PRINCIPAL RESIDENCE.—The term ‘prin-
cipal residence’ shall have same meaning as when
used in section 121.
‘‘(2) TREATMENT OF EXPENSES PAID BY DE-
PENDENT.—If a deduction under section 151 with
respect to an individual is allowed to another tax-
payer for a taxable year beginning in the calendar
year in which such individual’s taxable year begins,
no credit shall be allowed under subsection (a) to
such individual for such individual’s taxable year.
‘‘(3) MULTIPLE
TAXPAYERS
RENTING
THE
SAME PRINCIPAL RESIDENCE.—This section shall be
applied to separately to the portion of the rent paid
by an individual to rent the same principal residence
with 2 or more taxpayers.
‘‘(4) ELDERLY
AND
HANDICAPPED
DEPEND-
ENTS.—In the case of a dependent for whom the
taxpayer is allowed an exemption under section 151
who—
‘‘(A) has attained age 65 before the close
of the taxable year, or
‘‘(B) retired on disability before the close
of the taxable year and who, when he retired,
was permanently and totally disabled (within
the meaning of section 22(e)(3)),
the principal residence taken into account under this
section shall be the principal residence of such de-
pendent.
‘‘(e) DENIAL OF CREDIT IF MORTGAGE INTEREST
DEDUCTION ALLOWED.—No credit shall be allowed under
this section for a taxable year for a taxpayer for whom
deduction under section 163(h) is allowable for the taxable
year.’’.
(b) TECHNICAL AMENDMENTS.—
(1) Paragraph (2) of section 1324(b) of title
31, United States Code, is amended by inserting ‘‘or
from section 35 of such Code’’ before the period at
the end.
(2) The table of sections for such subpart C is
amended by striking the item relating to section 35
and inserting the following new items:
‘‘Sec. 35. Credit for rent in excess of 30 percent of income.
‘‘Sec. 36. Overpayment of taxes.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2001.
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