(1) LOAN REPAYMENT.—There are authorized 
to be appropriated to carry out this section such 
sums as may be necessary. 
(2) PERKINS LOAN FUNDS.—There are author-
ized to be appropriated such sums as may be nec-
essary for Federal capital contributions to student 
loan funds established under part E of title IV of 
the Higher Education Act of 1965. 
(h) REPAYMENT
EXCLUDED
FROM
GROSS
IN-
COME.—Section 108(f)(1) (relating to student loans) is 
amended by inserting ‘‘or pursuant to section 101 of the 
New Homestead Act of 2006’’ after ‘‘employers’’. 
SEC. 102. CREDIT FOR CERTAIN RURAL HOMEBUYERS. 
(a) IN GENERAL.—Subpart A of part IV of sub-
chapter A of chapter 1 (relating to nonrefundable personal 
credits) is amended by inserting before section 26 the fol-
lowing new section: 
‘‘SEC. 25E. PURCHASE OF RESIDENCES BY CERTAIN RURAL 
HOMEBUYERS. 
‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in-
dividual who purchases a qualified residence in a quali-
fying county during any taxable year, there shall be al-
lowed as a credit against the tax imposed by this chapter 
for the taxable year an amount equal to the lesser of— 
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‘‘(1) 10 percent of the purchase price of the 
residence, or 
‘‘(2) $5,000. 
‘‘(b) LIMITATIONS.— 
‘‘(1) LIMITATION
BASED
ON
AMOUNT
OF 
TAX.—In the case of a taxable year to which section 
26(a)(2) does not apply, the credit allowed under 
subsection (a) for any taxable year shall not exceed 
the excess of— 
‘‘(A) the sum of the regular tax liability 
(as defined in section 26(b)) plus the tax im-
posed by section 55, over 
‘‘(B) the sum of the credits allowable 
under this subpart (other than this section) and 
section 27 for the taxable year. 
‘‘(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 the residence is a qualified residence with respect 
to both the husband and wife, and the amount speci-
fied under subsection (a)(2) shall apply to the joint 
return. 
‘‘(3) MARRIED
INDIVIDUALS
FILING
SEPA-
RATELY.—In the case of a married individual filing 
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a separate return, subsection (a)(2) shall be applied 
by substituting ‘$2,500’ for ‘$5,000’. 
‘‘(4) OTHER TAXPAYERS.—If 2 or more individ-
uals who are not married purchase a qualified resi-
dence, the amount of the credit allowed under sub-
section (a) shall be allocated among such individuals 
in such manner as the Secretary may prescribe, ex-
cept that the total amount of the credits allowed to 
all such individuals shall not exceed $5,000. 
‘‘(c) DEFINITIONS.—For purposes of this section— 
‘‘(1) QUALIFIED RESIDENCE.—The term ‘quali-
fied residence’ has the same meaning as when used 
in section 163(h). 
‘‘(2) QUALIFYING COUNTY.—The term ‘quali-
fying county’ means any county which— 
‘‘(A) is outside a metropolitan statistical 
area (defined as such by the Office of Manage-
ment and Budget), and 
‘‘(B) during the 20-year period ending 
with the calendar year preceding the date of the 
enactment of this section, has a net out-migra-
tion of inhabitants from the county of at least 
10 percent of the population of the county at 
the beginning of such period. 
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‘‘(3) PURCHASE AND PURCHASE PRICE.—The 
terms ‘purchase’ and ‘purchase price’ have the 
meanings provided by section 1400C(e). 
‘‘(d) CARRYFORWARD OF UNUSED CREDIT.—If the 
credit allowable under subsection (a) for any taxable year 
exceeds the limitation imposed by subsection (b)(1) for 
such taxable year reduced by the sum of the credits allow-
able under this subpart (other than this section and sec-
tion 23), such excess shall be carried to the succeeding 
taxable year and added to the credit allowable under sub-
section (a) for such taxable year. 
‘‘(1) RULE
FOR
YEARS
IN
WHICH
ALL
PER-
SONAL CREDITS ALLOWED AGAINST REGULAR AND 
ALTERNATIVE MINIMUM TAX.—In the case of a tax-
able year to which section 26(a)(2) applies, if the 
credit allowable under subsection (a) for any taxable 
year exceeds the limitation imposed by section 
26(a)(2) for such taxable year reduced by the sum 
of the credits allowable under this subpart (other 
than this section), such excess shall be carried to the 
succeeding taxable year and added to the credit al-
lowable under subsection (a) for such taxable year. 
‘‘(2) RULE FOR OTHER YEARS.—In the case of 
a taxable year to which section 26(a)(2) does not 
apply, if the credit allowable under subsection (a) for 
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any taxable year exceeds the limitation imposed by 
subsection (b)(4) for such taxable year, such excess 
shall be carried to the succeeding taxable year and 
added to the credit allowable under subsection (a) 
for such taxable year. 
‘‘(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 OF CREDIT IN CASE OF CERTAIN 
SALES.— 
‘‘(1) IN GENERAL.—Except as provided in para-
graph (5), if the taxpayer disposes of a qualified res-
idence with respect to the purchase of which a credit 
was allowed under subsection (a) at any time within 
5 years after the date the taxpayer acquired the 
property, then the tax imposed under this chapter 
for the taxable year in which the disposition occurs 
is increased by the credit recapture amount. 
‘‘(2) CREDIT RECAPTURE AMOUNT.—For pur-
poses of paragraph (1), the credit recapture amount 
is an amount equal to the sum of— 
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‘‘(A) the applicable recapture percentage of 
the amount of the credit allowed to the tax-
payer under this section, plus 
‘‘(B) interest at the overpayment rate es-
tablished under section 6621 on the amount de-
termined under subparagraph (A) for each 
prior taxable year for the period beginning on 
the due date for filing the return for the prior 
taxable year involved. 
No deduction shall be allowed under this chapter for 
interest described in subparagraph (B). 
‘‘(3) APPLICABLE RECAPTURE PERCENTAGE.— 
‘‘(A) IN GENERAL.—For purposes of this 
subsection, the applicable recapture percentage 
shall be determined from the following table: 
The applicable 
recapture 
‘‘If the sale occurs in: 
percentage is: 
Year 1 ......................................................................................
100
Year 2 ......................................................................................
Year 3 ......................................................................................
Year 4 ......................................................................................
Year 5 ......................................................................................
Years 6 and thereafter .............................................................
0. 
‘‘(B) YEARS.—For purposes of subpara-
graph (A), year 1 shall begin on the first day 
of the taxable year in which the purchase of the 
qualified residence described in subsection (a) 
occurs. 
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