I 
109TH CONGRESS 
1ST SESSION H. R. 1549
To amend the Internal Revenue Code of 1986 to allow an income tax credit 
for the provision of homeownership and community development, and 
for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
APRIL 12, 2005
Mr. REYNOLDS (for himself, Mr. CARDIN, Mr. PORTMAN, Ms. PRYCE of Ohio, 
Mr. ENGLISH of Pennsylvania, Mrs. JOHNSON of Connecticut, Mr. 
HERGER, Mr. RAMSTAD, Mr. HAYWORTH, Mr. LEWIS of Kentucky, Mr. 
FOLEY, Mr. BRADY of Texas, Mr. CANTOR, Ms. HART, Mr. CHOCOLA, 
Mr. MCDERMOTT, Mr. LEWIS of Georgia, Mr. MCNULTY, Mr. JEFFER-
SON, Mr. POMEROY, Mr. THOMPSON of California, Mr. LARSON of Con-
necticut, Mr. EMANUEL, Mr. BOEHNER, Mr. FOSSELLA, Mr. BOUSTANY, 
Mr. KIRK, Mr. OTTER, Mr. YOUNG of Alaska, Mr. GARY G. MILLER of 
California, Mr. SHAYS, Mr. CUMMINGS, Mr. FORTUN˜O, Mr. TOWNS, Mr. 
SIMPSON, Mr. LYNCH, and Mr. SKELTON) 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 an 
income tax credit for the provision of homeownership 
and community development, and for other purposes.
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 ‘‘Renewing the Dream 
Tax Credit Act’’.
SEC. 2. COMMUNITY HOMEOWNERSHIP CREDIT. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
1986 (relating to business related credits) is amended by 
inserting after section 42 the following new section: 
‘‘SEC. 42A. COMMUNITY HOMEOWNERSHIP CREDIT. 
‘‘(a) ALLOWANCE OF CREDIT.—For purposes of sec-
tion 38, the amount of the homeownership credit deter-
mined under this section for any taxable year in the credit 
period shall be an amount equal to the applicable percent-
age of the eligible basis of each qualified residence. 
‘‘(b) APPLICABLE PERCENTAGE.—For purposes of 
this section—
‘‘(1) IN GENERAL.—The term ‘applicable per-
centage’ means the appropriate percentage pre-
scribed by the Secretary for the month in which the 
taxpayer and the homeownership credit agency enter 
into an agreement with respect to such residence 
(which is binding on such agency, the taxpayer, and 
all successors in interest) as to the homeownership 
credit dollar amount to be allocated to such resi-
dence. 
‘‘(2) METHOD
OF
PRESCRIBING
PERCENT-
AGE.—The percentage prescribed by the Secretary 
for any month shall be the percentage which will 
yield over a 5-year period amounts of credit under
subsection (a) which have a present value equal to 
50 percent of the eligible basis of a qualified resi-
dence. 
‘‘(3) METHOD OF DISCOUNTING.—The present 
value under paragraph (2) shall be determined—
‘‘(A) as of the last day of the 1st year of 
the 5-year period referred to in paragraph (2), 
‘‘(B) by using a discount rate equal to 72 
percent of the annual Federal mid-term rate 
applicable under section 1274(d)(1) to the 
month applicable under paragraph (1) and com-
pounded annually, and 
‘‘(C) by assuming that the credit allowable 
under this section for any year is received on 
the last day of such year. 
‘‘(c) QUALIFIED RESIDENCE.—For purposes of this 
section—
‘‘(1) IN GENERAL.—The term ‘qualified resi-
dence’ means any residence—
‘‘(A) which is located—
‘‘(i) in a census tract which has a me-
dian gross income which does not exceed 
80 percent of the greater of area or state-
wide median gross income,
‘‘(ii) in a rural area (as defined under 
section 520 of the Housing Act of 1949), 
‘‘(iii) on a reservation for a federally 
recognized Indian tribe, or 
‘‘(iv) in an area of chronic economic 
distress, and 
‘‘(B) which is purchased by a qualified 
buyer. 
For purposes of subparagraph (A)(iv), an area is an 
area of chronic economic distress if it is approved 
for designation as such under section 143(j)(3); ex-
cept that such designation shall not require the ap-
proval of the Secretary, shall be deemed to be ap-
proved by the Secretary of Housing and Urban De-
velopment if not approved or disapproved by the 
Secretary of Housing and Urban Development with-
in 60 days after submission for approval for pur-
poses of section 143(j)(3)(A)(ii), and shall cease to 
apply after the end of the 5th calendar year after 
the calendar year in which the designation is made. 
‘‘(2) RESIDENCE.—For purposes of paragraph 
(1), the term ‘residence’ means—
‘‘(A) a single-family home containing 1 to 
4 housing units, 
‘‘(B) a condominium unit, or
‘‘(C) stock in a cooperative housing cor-
poration (as defined in section 216(b)). 
In the case of a single-family home described in sub-
paragraph (A) that contains more than one housing 
unit, the term ‘residence’ shall not include any new 
residence and shall include only the portion of such 
home that is occupied by the owner thereof (deter-
mined based on the percentage of the total area of 
such home that is occupied by the owner). In the 
case of subparagraphs (A), (B), and (C), factory-
built homes shall be included in the definition of res-
idence. 
‘‘(3) TIMING
OF
DETERMINATION.—For pur-
poses of paragraph (1), the determination of wheth-
er a residence is a qualified residence shall be made 
at the time a binding commitment for an allocation 
of credit is awarded by the homeownership credit 
agency; except that the determination of whether a 
purchaser is a qualified buyer shall be made at the 
time the residence is sold. 
‘‘(4) MEDIAN GROSS INCOME.—For purposes of 
this section, median gross income shall be deter-
mined consistent with section 143(f)(2). 
‘‘(d) ELIGIBLE BASIS.—For purposes of this sec-
tion—
‘‘(1) NEW QUALIFIED RESIDENCES.—
‘‘(A) IN GENERAL.—The eligible basis of a 
new qualified residence is—
‘‘(i) in the case of a qualified resi-
dence which is sold in a transaction which 
meets the requirements of subparagraph 
(B), its adjusted basis (excluding land) im-
mediately before such sale, and 
‘‘(ii) zero in any other case. 
‘‘(B) REQUIREMENTS.—A sale of a quali-
fied residence meets the requirements of this 
subparagraph if—
‘‘(i) the buyer acquires the qualified 
residence by purchase (as defined in sec-
tion 179(d)(2)), 
‘‘(ii) the buyer of the qualified resi-
dence is not a related person with respect 
to the seller, and 
‘‘(iii) in the case of a seller who mate-
rially participates in the development of 
the residence, the buyer’s debt financing is 
originated by a third party who is not a re-
lated person with respect to such seller. 
‘‘(2) EXISTING QUALIFIED RESIDENCES.—
‘‘(A) IN GENERAL.—The eligible basis of 
an existing qualified residence is—
‘‘(i) in the case of a qualified resi-
dence which is sold in a transaction which 
meets the requirements of subparagraph 
(B), its adjusted basis (excluding land) im-
mediately before such sale, and 
‘‘(ii) zero in any other case. 
‘‘(B) REQUIREMENTS.—A sale of a quali-
fied residence meets the requirements of this 
subparagraph if—
‘‘(i) the buyer acquires the qualified 
residence by purchase (as defined in sec-
tion 179(d)(2)), 
‘‘(ii) the qualified residence has un-
dergone substantial rehabilitation in con-
nection with the sale described in clause 
(i), 
‘‘(iii) the buyer of the qualified resi-
dence is not a related person with respect 
to the seller, and 
‘‘(iv) in the case of a seller who mate-
rially participates in the development of 
the residence, the buyer’s debt financing is
originated by a third party who is not a re-
lated person with respect to such seller. 
‘‘(C) SUBSTANTIAL REHABILITATION.—
‘‘(i) IN
GENERAL.—For purposes of 
subparagraph (B), substantial rehabilita-
tion means rehabilitation expenditures paid 
or incurred with respect to a qualified resi-
dence that are at least $15,000. 
‘‘(ii) INFLATION
ADJUSTMENT.—In 
the case of a calendar year after 2005, the 
dollar amount contained in clause (i) shall 
be increased by an amount equal to—
‘‘(I) such dollar amount, multi-
plied by 
‘‘(II) the cost-of-living adjust-
ment determined under section 1(f)(3) 
for such calendar year by substituting 
‘calendar year 2004’ for ‘calendar 
year 1992’ in subparagraph (B) there-
of. 
Any increase under clause (ii) which is not 
a multiple of $1,000 shall be rounded to 
the next lowest multiple of $1,000. 
‘‘(D) 
LIMITATION
ON
ACQUISITION 
BASIS.—The eligible basis of an existing quali-
fied residence may not exceed 150 percent of 
the qualified rehabilitation expenditures. 
‘‘(3) EFFECT OF SUBSEQUENT SALE, ETC.—A 
subsequent sale, assignment, rental, or refinancing 
of the qualified residence by the buyer or the subse-
quent sale, assignment, or pooling of the buyer’s fi-
nancing by the originator shall not be considered in 
determining whether or not the prior sales trans-
action satisfied the requirements of subparagraph 
(B) of paragraph (1) or (2). 
‘‘(4) SPECIAL
RULES
RELATING
TO
DETER-
MINATION OF ADJUSTED BASIS.—For purposes of 
this subsection—
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), the adjusted basis of any 
qualified residence—
‘‘(i) shall not include so much of the 
basis of such qualified residence as is de-
termined by reference to the basis of other 
property held at any time by the person 
acquiring the residence, and 
‘‘(ii) shall be determined without re-
gard to the adjusted basis of any property 
which is not part of such qualified resi-
dence.
‘‘(B) BASIS
OF
PROPERTY
IN
COMMON 
AREAS, ETC., INCLUDED.—The adjusted basis 
of any qualified residence shall be determined 
by taking into account (on a pro rata basis) the 
adjusted basis of property (other than land) 
used in common areas or provided as com-
parable amenities to all residences within a 
project. 
‘‘(5) SPECIAL RULES FOR DETERMINING ELIGI-
BLE BASIS.—
‘‘(A) RELATED
PERSON, ETC.—For pur-
poses of this section, a person (in this clause re-
ferred to as the ‘related person’) is related to 
any person if the related person bears a rela-
tionship to such person specified in section 
267(b) or 707(b)(1), or the related person and 
such person are engaged in trades or businesses 
under common control (within the meaning of 
subsections (a) and (b) of section 52). For pur-
poses of the preceding sentence, in applying 
section 267(b) or 707(b)(1), ‘10 percent’ shall 
be substituted for ‘50 percent’. 
‘‘(B) 
NONRESIDENTIAL
SPACE
EX-
CLUDED.—No portion of the eligible basis of a
qualified residence shall include costs attrib-
utable to nonresidential space. 
‘‘(C) LIMITATION.—The eligible basis of 
any residence may not exceed the mortgage 
limit for Federal Housing Administration in-
sured mortgages for single family homes in the 
area in which such residence is located. 
‘‘(e) DEFINITION AND SPECIAL RULES RELATING TO 
CREDIT PERIOD.—
‘‘(1) CREDIT PERIOD DEFINED.—For purposes 
of this section, the term ‘credit period’ means, with 
respect to any qualified residence, the period of 5 
taxable years beginning with the taxable year in 
which the sale of the qualified residence occurs satis-
fying the requirements of subsection (d)(1)(B) or 
(d)(2)(B). 
‘‘(2) SPECIAL RULE FOR 1ST YEAR OF CREDIT 
PERIOD.—
‘‘(A) IN GENERAL.—The credit allowable 
under subsection (a) with respect to any quali-
fied residence for the 1st taxable year of the 
credit period shall be determined by multiplying 
the eligible basis under subsection (d) by the 
fraction—