‘‘(f) DEFINITION AND SPECIAL RULES RELATING TO
CREDIT PERIOD.—
‘‘(1) CREDIT PERIOD DEFINED.—For purposes
of this section, the term ‘credit period’ means the
period of 10 taxable years beginning with the tax-
able year in which a home ownership tax credit
amount is allocated to the taxpayer.
‘‘(2) SPECIAL RULE FOR 1ST YEAR OF CREDIT
PERIOD.—
‘‘(A) IN GENERAL.—The credit allowable
under subsection (a) with respect to any tax-
payer for the 1st taxable year of the credit pe-
riod shall be determined by substituting for the
applicable percentage under subsection (a)(2)
the fraction—
‘‘(i) the numerator of which is the
sum of the applicable percentages deter-
mined under subsection (a)(2) as of the
close of each full month of such year, dur-
ing which the taxpayer was a qualified
lender, and
‘‘(ii) the denominator of which is 12.
‘‘(B) DISALLOWED 1ST YEAR CREDIT AL-
LOWED IN 11TH YEAR.—Any reduction by rea-
son of subparagraph (A) in the credit allowable
(without regard to subparagraph (A)) for the
1st taxable year of the credit period shall be al-
lowable under subsection (a) for the 1st taxable
year following the credit period.
‘‘(3) 
DISPOSITION
OF
HOME
OWNERSHIP
LOANS.—If a qualified home ownership loan is dis-
posed of during any year for which a credit is allow-
able under subsection (a), such credit shall be allo-
cated between the parties on the basis of the number
of days during such year the mortgage was held by
each and the portion of the total credit allocated to
the qualified lender which is attributable to such
mortgage.
‘‘(g) LOSS OF CREDIT.—If, during the taxable year,
a qualified home ownership loan is repaid prior to the expi-
ration of the credit period with respect to such loan, the
amount of the home ownership tax credit attributable to
such loan is no longer available under subsection (a). A
rule similar to the rule of subsection (f)(3) shall apply for
purposes of the preceding sentence.
‘‘(h) RECAPTURE OF PORTION OF FEDERAL SUBSIDY
FROM HOME OWNER.—
‘‘(1) IN GENERAL.—If, during the taxable year,
any taxpayer described in paragraph (3) disposes of
an interest in a residence with respect to which a
home ownership tax credit amount applies, then the
taxpayer’s tax imposed by this chapter for such tax-
able year shall be increased by 50 percent of the
gain (if any) on the disposition of such interest.
‘‘(2) EXCEPTIONS.—Paragraph (1) shall not
apply to any disposition—
‘‘(A) by reason of death,
‘‘(B) which is made on a date that is more
than 10 years after the date on which the quali-
fied home ownership loan secured by such resi-
dence was made, or
‘‘(C) in which the purchaser of the resi-
dence assumes the qualified home ownership
loan secured by the residence.
‘‘(3) INCOME LIMITATION.—A taxpayer is de-
scribed in this paragraph if, on the date of the dis-
position, the family income of the mortgagor is 115
percent or more of the area median gross income as
determined under subsection (d)(1)(A) for the year
in which the disposition occurs.
‘‘(4) SPECIAL RULES RELATING TO LIMITATION
ON
RECAPTURE
AMOUNT
BASED
ON
GAIN
REAL-
IZED.—For purposes of this subsection, rules similar
to the rules of section 143(m)(6) shall apply.
‘‘(5) LENDER TO INFORM MORTGAGOR OF PO-
TENTIAL RECAPTURE.—The qualified lender which
makes a qualified home ownership loan to a mort-
gagor shall, at the time of settlement, provide a
written statement informing the mortgagor of the
potential recapture under this subsection.
‘‘(6) SPECIAL
RULES.—For purposes of this
subsection, rules similar to the rules of section
143(m)(8) shall apply.
‘‘(i) OTHER DEFINITIONS.—For purposes of this
section—
‘‘(1) 
NEIGHBORHOOD
REVITALIZATION
PROJECT LOAN.—
‘‘(A) IN GENERAL.—The term ‘neighbor-
hood revitalization project loan’ means a loan
secured by a second lien on a residence, the
proceeds of which are used to substantially im-
prove such residence in connection with a
neighborhood revitalization project.
‘‘(B) 
NEIGHBORHOOD
REVITALIZATION
PROJECT.—The term ‘neighborhood revitaliza-
tion project’ means a project of sufficient size
and scope to alleviate physical deterioration and
stimulate investment in—
‘‘(i) a geographic location within the
jurisdiction of a unit of local government
(but not the entire jurisdiction) designated
in comprehensive plans, ordinances, or
other documents as a neighborhood, vil-
lage, or similar geographic designation, or
‘‘(ii) the entire jurisdiction of a unit
of local government if the population of
such jurisdiction is not in excess of 25,000.
‘‘(2) STATE.—The term ‘State’ includes a pos-
session of the United States.
‘‘(3) STATE HOUSING FINANCE AGENCY.—The
term ‘State housing finance agency’ means the pub-
lic agency, authority, corporation, or other instru-
mentality of a State that has the authority to pro-
vide residential mortgage loan financing throughout
the State.
‘‘(j) CERTIFICATION AND OTHER REPORTS TO THE
SECRETARY.—
‘‘(1) CERTIFICATION WITH RESPECT TO STATE
ALLOCATION OF HOME OWNERSHIP TAX CREDITS.—
The Secretary may, upon a finding of noncompli-
ance, revoke the certification of a qualified State and
revoke any qualified home ownership tax credit