I
105TH CONGRESS
1ST SESSION
H. R. 317
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 7, 1997
Mr. SOLOMON 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 1997’’.
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 23 the following new
section:
‘‘SEC. 24. PURCHASE OF PRINCIPAL RESIDENCE BY FIRST-
TIME HOMEBUYER.
‘‘(a) ALLOWANCE OF CREDIT.—If an individual who
is a first-time homebuyer purchases a principal residence
(within the meaning of section 1034), there shall be al-
lowed to such individual as a credit against the tax im-
posed by this chapter an amount equal to 10 percent of
the purchase price of the principal residence.
‘‘(b) LIMITATIONS.—
‘‘(1) MAXIMUM
CREDIT.—The credit allowed
under subsection (a) shall not exceed $5,000.
‘‘(2) LIMITATION
TO
ONE
RESIDENCE.—The
credit under this section shall be allowed with re-
spect to only one residence of the taxpayer.
‘‘(3) 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.
‘‘(4) OTHER TAXPAYERS.—In the case of indi-
viduals to whom paragraph (3) does not apply who
together purchase the same new principal residence
for use as their principal residence, the credit under
this section is allowable only if each of the individ-
uals is a first-time homebuyer, and the sum of the
amount of credit allowed to such individuals shall
not exceed the lesser of $5,000 or 10 percent of the
total purchase price of the residence. The amount of
any credit allowable under this section shall be ap-
portioned among such individuals under regulations
to be prescribed by the Secretary.
‘‘(5) CARRYFORWARD OF UNUSED CREDITS.—If
the credit allowable under subsection (a) for any tax-
able 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 forward
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 pre-
ceding sentence, credits shall be treated as used on
a first-in first-out basis.
‘‘(6) 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 AND SPECIAL RULES.—For pur-
poses of this section—
‘‘(1) PURCHASE
PRICE.—The term ‘purchase
price’ means the adjusted basis of the principal resi-
dence on the date of the acquisition thereof.
‘‘(2) FIRST-TIME HOMEBUYER.—
‘‘(A) IN GENERAL.—The term ‘first-time
homebuyer’ means any individual if such indi-
vidual has not had a present ownership interest
in any residence (including an interest in a
housing cooperative) at any time within the 36-
month period ending on the date of acquisition
of the residence on which the credit allowed
under subsection (a) is to be claimed. An inter-
est in a partnership, S corporation, or trust
that owns an interest in a residence is not con-
sidered an interest in a residence for purposes
of this paragraph except as may be provided in
regulations.
‘‘(B) 
CERTAIN
INDIVIDUALS.—Notwith-
standing subparagraph (A), an individual is not
a first-time homebuyer on the date of purchase
of a residence if on that date the running of
any period of time specified in section 1034 is
suspended under subsection (h) or (k) of sec-
tion 1034 with respect to that individual.
‘‘(3) SPECIAL
RULES
FOR
CERTAIN
ACQUISI-
TIONS.—No credit is allowable under this section
if—
‘‘(A) the residence is acquired from a per-
son whose relationship to the person acquiring
it would result in the disallowance of losses
under section 267 or 707(b), or
‘‘(B) the basis of the residence in the
hands of the person acquiring it is deter-
mined—
‘‘(i) in whole or in part by reference
to the adjusted basis of such residence in
the hands of the person from whom it is
acquired, or
‘‘(ii) under section 1014(a) (relating
to property acquired from a decedent).
‘‘(d) 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 applicable period prescribed in
section 1034, the taxpayer purchases a new principal
residence, then the provisions of paragraph (1) shall
not apply and the tax imposed by this chapter for
the taxable year in which the new principal residence
is purchased is increased to the extent the amount
of the credit that could be claimed under this section
on the purchase of the new residence (determined
without regard to subsection (e)) is less than the
amount of credit claimed by the taxpayer under this
section.
‘‘(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.
‘‘(e) 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, 1997, and before Janu-
ary 1, 1998, or
‘‘(B) the taxpayer enters into, on or after
January 1, 1997, and before January 1, 1998,
a binding contract to acquire the residence, and
acquires and occupies the residence before July
1, 1998.’’
(b) 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 23 the following new item:
‘‘Sec. 24. Purchase of principal residence by first-time home-
buyer.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect on January 1, 1997.
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