SEC. 2. QUALIFIED SERVICE MEMBER HOMEBUYER CRED-
IT. 
(a) IN GENERAL.—Subpart C of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by redesignating section 36 as section 
37 and by inserting after section 35 the following new sec-
tion: 
‘‘SEC. 
36. 
QUALIFIED 
SERVICE 
MEMBER 
HOMEBUYER 
CREDIT. 
‘‘(a) ALLOWANCE
OF CREDIT.—In the case of a 
qualified service member, or such service member’s sur-
viving spouse, who purchases a principal residence, there 
shall be allowed to the taxpayer a credit against the tax 
imposed by this chapter an amount equal to 10 percent 
of the purchase price of such residence. 
‘‘(b) LIMITATIONS.— 
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in this paragraph, the credit allowed under 
subsection (a) shall not exceed $7,500. 
‘‘(2) MARRIED
INDIVIDUALS
FILING
SEPA-
RATELY.—In the case of a married individual filing 
a separate return, paragraph (1) shall be applied by 
substituting ‘$3,750’ for ‘$7,500’. 
‘‘(3) OTHER INDIVIDUALS.—If two or more in-
dividuals who are not married purchase a principal 
residence, the amount of the credit allowed under 
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subsection (a) shall be allocated among such individ-
uals in such a manner as the Secretary may pre-
scribe, except that the total amount of the credits al-
lowed to all such individuals shall not exceed $7,500. 
‘‘(4) ONE-TIME ONLY.—If an individual receives 
a credit under subsection (a) for the purchase of a 
principal residence, such individual shall not be al-
lowed a credit under subsection (a) with respect to 
the purchase of any other principal residence. The 
preceding sentence shall not apply to a principal res-
idence with respect to which a credit is allowed 
under subsection (a) and to which subsection (e)(1) 
applies. 
‘‘(c) DEFINITIONS.— 
‘‘(1) QUALIFIED SERVICE MEMBER.—The term 
‘qualified service member’ means a current or 
former service member who performs duty in a com-
bat zone between the years 2001 and 2010. 
‘‘(2) SERVICE
MEMBER.—The term ‘service 
member’ means a member of the uniformed services 
(as defined in section 101(a)(5) of title 10, United 
States Code). 
‘‘(3) COMBAT ZONE.—The term ‘combat zone’ 
has the meaning given such term by section 
112(c)(2). 
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‘‘(4) PRINCIPAL RESIDENCE.—The term ‘prin-
cipal residence’ has the same meaning as when used 
in section 121. 
‘‘(5) PURCHASE.— 
‘‘(A) IN GENERAL.—The term ‘purchase’ 
means any acquisition, but only if— 
‘‘(i) the property is not acquired from 
a person related to the person acquiring it, 
and 
‘‘(ii) the basis of the property in the 
hands of the person acquiring it is not de-
termined— 
‘‘(I) in whole or part by reference 
to the adjusted basis of such property 
in the hands of the person from whom 
acquired it, 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 on the date the 
taxpayer first occupies the residence. 
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‘‘(6) PURCHASE
PRICE.—The term ‘purchase 
price’ means the adjusted basis of the principal resi-
dence on the date such residence is purchased. 
‘‘(7) RELATED
PERSONS.—A person shall be 
treated as related to another person if the relation-
ship between such persons would result in the dis-
allowance of losses under section 267 or 707(b) (but 
in applying section 267(b) and (c) for purposes of 
this section, paragraph (4) of section 267(c) shall be 
treated as providing that the family of an individual 
shall include only his spouse, ancestors, and lineal 
descendants). 
‘‘(d) EXCEPTIONS.—No credit under subsection (a) 
shall be allowed to any taxpayer for any taxable year with 
respect to the purchase of a residence if— 
‘‘(1) the residence is financed by the proceeds 
of a qualified mortgage issue, the interest on which 
is exempt from tax under section 103, 
‘‘(2) the taxpayer is a nonresident alien, or 
‘‘(3) the taxpayer disposes of such residence (or 
such residence ceases to be the principal residence of 
the taxpayer (and, if married, the taxpayer’s 
spouse)) before the close of such taxable year. 
‘‘(e) RECAPTURE OF CREDIT.— 
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‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in this subsection, if a taxpayer disposes of the 
principal residence with respect to which a credit 
was allowed under subsection (a) (or such residence 
ceases to be the principal residence of the taxpayer) 
before the end of the recapture period, the taxpayer 
shall take into gross income an amount equal to one 
half the credit allowed under subsection (a) in the 
first taxable year following such disposal or cessation 
and one half in the second taxable year following 
such disposal or cessation. 
‘‘(2) EXCEPTIONS.— 
‘‘(A) DEATH
OF
TAXPAYER.—Paragraph 
(1) shall not apply to any taxable year ending 
after the date of the taxpayer’s death. 
‘‘(B) INVOLUNTARY
CONVERSION.—Para-
graph (1) shall not apply in the case of a resi-
dence which is compulsorily or involuntarily 
converted (within the meaning of section 
1033(a)) if the taxpayer acquires a new prin-
cipal residence during the 2-year period begin-
ning on the date of the disposition or cessation 
referred to in paragraph (1). Paragraph (1) 
shall apply to such new principal residence dur-
ing the recapture period in the same manner as 
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if such new principal residence were the con-
verted residence. 
‘‘(C) TRANSFERS BETWEEN SPOUSES OR 
INCIDENT TO DIVORCE.—In the case of a trans-
fer of a residence to which section 1041(a) ap-
plies— 
‘‘(i) paragraph (1) shall not apply to 
such transfer, and 
‘‘(ii) in the case of taxable years end-
ing after such transfer, paragraph (1) shall 
apply to the transferee in the same manner 
as if such transferee were the transferor 
(and shall not apply to the transferor). 
‘‘(D) ACQUISITION
OF
NEW
PRINCIPAL 
RESIDENCE.—Paragraph (1) shall not apply if 
the taxpayer acquires a new principal residence 
during the 2-year period beginning on the date 
of the disposition. Paragraph (1) shall apply to 
such new principal residence during the recap-
ture period in the same manner as if such new 
principal residence were the disposed residence. 
‘‘(3) RECAPTURE
PERIOD.—For purposes of 
this subsection, the term ‘recapture period’ means 
the taxable year following the taxable year for which 
a credit is allowed under subsection (a). 
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‘‘(4) JOINT RETURNS.—In the case of a credit 
allowed under subsection (a) with respect to a joint 
return, half of such credit shall be treated as having 
been allowed to each individual filing such return for 
purposes of this subsection. 
‘‘(f) APPLICATION OF SECTION.—This section shall 
only apply to principal residences purchased by the tax-
payer before January 1, 2011.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 26(b)(2) of such Code is amended 
by striking ‘‘and’’ at the end of subparagraph (U), 
by striking the period and inserting ‘‘, and’’ at the 
end of paragraph (V), and by inserting after sub-
paragraph (V) the following new subparagraph: 
‘‘(W) section 36(e) (relating to recapture 
of qualified service member homebuyer cred-
it).’’. 
(2) Section 6211(b)(4)(A) of such Code is 
amended by striking ‘‘34’’ and all that follows 
through ‘‘6428’’ and inserting ‘‘34, 35, 36, 53(e), 
and 6428’’. 
(3) Section 1324(b)(2) of title 31, United 
States Code, is amended by inserting‘‘, 36’’ after 
‘‘section 35’’. 
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(4) The table of sections for subpart C of part 
IV of subchapter A of chapter 1 of the Internal Rev-
enue Code of 1986 is amended by redesignating the 
item relating to section 36 as an item relating to 
section 37 and by inserting before such item the fol-
lowing new item: 
‘‘Sec. 36. Qualified Service Member Homebuyer Credit.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to principal residences purchased 
by the taxpayer on or after the date of enactment of this 
Act. 
Æ 
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