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Housing Act of 1949, or any other housing 
program administered by the Department of 
Housing and Urban Development or by the 
Rural Housing Service of the Department of 
Agriculture. 
‘‘(ii) STATE-ASSISTED BUILDING.—The 
term ‘State-assisted building’ means any 
building which is substantially assisted, fi-
nanced, or operated under any State law 
similar in purposes to any of the laws re-
ferred to in clause (i).’’. 
(g) REPEAL OF DEADWOOD.— 
(1) Clause (ii) of section 42(d)(2)(B) is amended 
by striking ‘‘the later of—’’ and all that follows and 
inserting ‘‘the date the building was last placed in 
service,’’. 
(2) Subparagraph (D) of section 42(d)(2) is 
amended by striking clause (i) and by redesignating 
clauses (ii) and (iii) as clauses (i) and (ii), respec-
tively. 
(3) Paragraph (5) of section 42(d) is amended 
by striking subparagraph (B) and by redesignating 
subparagraph (C) as subparagraph (B). 
(h) EFFECTIVE DATE.—
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(1) IN GENERAL.—Except as otherwise provided 
in paragraph (2), the amendments made by this sub-
section shall apply to buildings placed in service after 
the date of the enactment of this Act. 
(2) REHABILITATION REQUIREMENTS.— 
(A) IN GENERAL.—The amendments made 
by subsection (b) shall apply to buildings with 
respect to which housing credit dollar amounts 
are allocated after the date of the enactment of 
this Act. 
(B) BUILDINGS NOT SUBJECT TO ALLOCA-
TION LIMITS.—To the extent paragraph (1) of 
section 42(h) of the Internal Revenue Code of 
1986 does not apply to any building by reason 
of paragraph (4) thereof, the amendments made 
by subsection (b) shall apply buildings financed 
with bonds issued pursuant to allocations made 
after the date of the enactment of this Act. 
SEC. 3004. OTHER SIMPLIFICATION AND REFORM OF LOW- 
INCOME HOUSING TAX INCENTIVES. 
(a) REPEAL PROHIBITION ON MODERATE REHABILI-
TATION ASSISTANCE.—Paragraph (2) of section 42(c) (de-
fining qualified low-income building) is amended by strik-
ing the flush sentence at the end.
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(b) MODIFICATION OF TIME LIMIT FOR INCURRING 10 
PERCENT
OF PROJECT’S COST.—Clause (ii) of section 
42(h)(1)(E) is amended by striking ‘‘(as of the later of the 
date which is 6 months after the date that the allocation 
was made or the close of the calendar year in which the 
allocation is made)’’ and inserting ‘‘(as of the date which 
is 1 year after the date that the allocation was made)’’. 
(c) REPEAL OF BONDING REQUIREMENT ON DISPOSI-
TION OF BUILDING.—Paragraph (6) of section 42(j) (relat-
ing to no recapture on disposition of building (or interest 
therein) where bond posted) is amended to read as follows: 
‘‘(6) NO RECAPTURE ON DISPOSITION OF BUILD-
ING WHICH CONTINUES IN QUALIFIED USE.— 
‘‘(A) IN
GENERAL.—The increase in tax 
under this subsection shall not apply solely by 
reason of the disposition of a building (or an in-
terest therein) if it is reasonably expected that 
such building will continue to be operated as a 
qualified low-income building for the remaining 
compliance period with respect to such building. 
‘‘(B) STATUTE
OF
LIMITATIONS.—If a 
building (or an interest therein) is disposed of 
during any taxable year and there is any reduc-
tion in the qualified basis of such building which 
results in an increase in tax under this sub-
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section for such taxable or any subsequent tax-
able year, then— 
‘‘(i) the statutory period for the assess-
ment of any deficiency with respect to such 
increase in tax shall not expire before the 
expiration of 3 years from the date the Sec-
retary is notified by the taxpayer (in such 
manner as the Secretary may prescribe) of 
such reduction in qualified basis, and 
‘‘(ii) such deficiency may be assessed 
before the expiration of such 3-year period 
notwithstanding the provisions of any other 
law or rule of law which would otherwise 
prevent such assessment.’’. 
(d) ENERGY EFFICIENCY
AND HISTORIC NATURE 
TAKEN INTO ACCOUNT IN MAKING ALLOCATIONS.—Sub-
paragraph (C) of section 42(m)(1) (relating to plans for 
allocation of credit among projects) is amended by striking 
‘‘and’’ at the end of clause (vii), by striking the period at 
the end of clause (viii) and inserting a comma, and by add-
ing at the end the following new clauses: 
‘‘(ix) the energy efficiency of the 
project, and 
‘‘(x) the historic nature of the project.’’.
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(e) CONTINUED ELIGIBILITY FOR STUDENTS WHO RE-
CEIVED FOSTER CARE ASSISTANCE.—Clause (i) of section 
42(i)(3)(D) is amended by striking ‘‘or’’ at the end of sub-
clause (I), by redesignating subclause (II) as subclause 
(III), and by inserting after subclause (I) the following new 
subclause: 
‘‘(II) a student who was pre-
viously under the care and placement 
responsibility of the State agency re-
sponsible for administering a plan 
under part B or part E of title IV of 
the Social Security Act, or’’. 
(f) TREATMENT OF RURAL PROJECTS.—Section 42(i) 
(relating to definitions and special rules) is amended by 
adding at the end the following new paragraph: 
‘‘(8) TREATMENT
OF
RURAL
PROJECTS.—For 
purposes of this section, in the case of any project for 
residential rental property located in a rural area (as 
defined in section 520 of the Housing Act of 1949), 
any income limitation measured by reference to area 
median gross income shall be measured by reference 
to the greater of area median gross income or na-
tional non-metropolitan median income. The pre-
ceding sentence shall not apply with respect to any 
building if paragraph (1) of section 42(h) does not
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number of members of the Armed Forces of 
the United States assigned to which, as of 
June 1, 2008, is not less than 1,000.’’. 
(b) EFFECTIVE DATE.—The amendments made by this 
section shall apply to— 
(1) determinations made after the date of the en-
actment of this Act and before January 1, 2012, in 
the case of any qualified building (as defined in sec-
tion 142(d)(2)(B)(iii) of the Internal Revenue Code of 
1986)— 
(A) with respect to which housing credit 
dollar amounts have been allocated on or before 
the date of the enactment of this Act, or 
(B) with respect to buildings placed in serv-
ice before such date of enactment, to the extent 
paragraph (1) of section 42(h) of such Code does 
not apply to such building by reason of para-
graph (4) thereof, but only with respect to bonds 
issued before such date of enactment, and 
(2) determinations made after the date of enact-
ment of this Act, in the case of qualified buildings (as 
so defined)— 
(A) with respect to which housing credit 
dollar amounts are allocated after the date of the
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enactment of this Act and before January 1, 
2012, or 
(B) with respect to which buildings placed 
in service after the date of enactment of this Act 
and before January 1, 2012, to the extent para-
graph (1) of section 42(h) of such Code does not 
apply to such building by reason of paragraph 
(4) thereof, but only with respect to bonds issued 
after such date of enactment and before January 
1, 2012. 
PART II—MODIFICATIONS TO TAX-EXEMPT 
HOUSING BOND RULES 
SEC. 3007. RECYCLING OF TAX-EXEMPT DEBT FOR FINANC-
ING RESIDENTIAL RENTAL PROJECTS. 
(a) IN GENERAL.—Subsection (i) of section 146 (relat-
ing to treatment of refunding issues) is amended by adding 
at the end the following new paragraph: 
‘‘(6) TREATMENT
OF
CERTAIN
RESIDENTIAL 
RENTAL PROJECT BONDS AS REFUNDING BONDS IRRE-
SPECTIVE OF OBLIGOR.— 
‘‘(A) IN GENERAL.—If, during the 6-month 
period beginning on the date of a repayment of 
a loan financed by an issue 95 percent or more 
of the net proceeds of which are used to provide 
projects described in section 142(d), such repay-
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ment is used to provide a new loan for any 
project so described, any bond which is issued to 
refinance such issue shall be treated as a refund-
ing issue to the extent the principal amount of 
such refunding issue does not exceed the prin-
cipal amount of the bonds refunded. 
‘‘(B) 
LIMITATIONS.—Subparagraph 
(A) 
shall apply to only one refunding of the original 
issue and only if— 
‘‘(i) the refunding issue is issued not 
later than 4 years after the date on which 
the original issue was issued, 
‘‘(ii) the latest maturity date of any 
bond of the refunding issue is not later than 
34 years after the date on which the re-
funded bond was issued, and 
‘‘(iii) the refunding issue is approved 
in accordance with section 147(f) before the 
issuance of the refunding issue.’’. 
(b) LOW-INCOME HOUSING CREDIT.—Clause (ii) of 
section 42(h)(4)(A) is amended by inserting ‘‘or such fi-
nancing is refunded as described in section 146(i)(6)’’ before 
the period at the end.
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(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to repayments of loans received after the 
date of the enactment of this Act. 
SEC. 3008. COORDINATION OF CERTAIN RULES APPLICABLE 
TO 
LOW-INCOME 
HOUSING 
CREDIT 
AND 
QUALIFIED RESIDENTIAL RENTAL PROJECT 
EXEMPT FACILITY BONDS. 
(a) DETERMINATION OF NEXT AVAILABLE UNIT.— 
Paragraph (3) of section 142(d) (relating to current income 
determinations) is amended by adding at the end the fol-
lowing new subparagraph: 
‘‘(C) EXCEPTION FOR PROJECTS WITH RE-
SPECT TO WHICH AFFORDABLE HOUSING CREDIT 
IS ALLOWED.—In the case of a project with re-
spect to which credit is allowed under section 42, 
the second sentence of subparagraph (B) shall be 
applied by substituting ‘building (within the 
meaning of section 42)’ for ‘project’.’’. 
(b) STUDENTS.—Paragraph (2) of section 142(d) (re-
lating to definitions and special rules) is amended by add-
ing at the end the following new subparagraph: 
‘‘(C) STUDENTS.—Rules similar to the rules 
of 42(i)(3)(D) shall apply for purposes of this 
subsection.’’.
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(c) SINGLE-ROOM OCCUPANCY UNITS.—Paragraph (2) 
of section 142(d) (relating to definitions and special rules), 
as amended by subsection (b), is amended by adding at the 
end the following new subparagraph: 
‘‘(D) SINGLE-ROOM OCCUPANCY UNITS.—A 
unit shall not fail to be treated as a residential 
unit merely because such unit is a single-room 
occupancy unit (within the meaning of section 
42).’’. 
(d) EFFECTIVE DATE.—The amendments made by this 
section shall apply to determinations of the status of quali-
fied residential rental projects for periods beginning after 
the date of the enactment of this Act, with respect to bonds 
issued before, on, or after such date. 
PART III—REFORMS RELATED TO THE LOW-IN-
COME HOUSING CREDIT AND TAX-EXEMPT 
HOUSING BONDS 
SEC. 3009. HOLD HARMLESS FOR REDUCTIONS IN AREA ME-
DIAN GROSS INCOME. 
(a) IN GENERAL.—Paragraph (2) of section 142(d), as 
amended by section 3008, is amended by adding at the end 
the following new subparagraph: 
‘‘(E) HOLD HARMLESS FOR REDUCTIONS IN 
AREA MEDIAN GROSS INCOME.—
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regard to the HUD hold harmless pol-
icy and this subparagraph) with re-
spect to such project for the current 
calendar year over the area median 
gross income (as so determined) with 
respect to such project for calendar 
year 2008. 
‘‘(iii) HUD HOLD
HARMLESS
POL-
ICY.—The term ‘HUD hold harmless policy’ 
means the regulations under which a policy 
similar to the rules of clause (i) applied to 
prevent a change in the method of deter-
mining area median gross income from re-
sulting in a reduction in the area median 
gross income determined with respect to cer-
tain projects in calendar years 2007 and 
2008. 
‘‘(iv) HUD 
HOLD
HARMLESS
IM-
PACTED
PROJECT.—The term ‘HUD hold 
harmless impacted project’ means any 
project with respect to which area median 
gross income was determined under sub-
paragraph (B) for calendar year 2007 or 
2008 if such determination would have been 
less but for the HUD hold harmless policy.’’.
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(b) EFFECTIVE DATE.—The amendment made by this 
section shall apply to determinations of area median gross 
income for calendar years after 2008. 
SEC. 3010. EXCEPTION TO ANNUAL CURRENT INCOME DE-
TERMINATION REQUIREMENT WHERE DETER-
MINATION NOT RELEVANT. 
(a) IN
GENERAL.—Subparagraph (A) of section 
142(d)(3) is amended by adding at the end the following 
new sentence: ‘‘The preceding sentence shall not apply with 
respect to any project for any year if during such year no 
residential unit in the project is occupied by a new resident 
whose income exceeds the applicable income limit.’’. 
(b) EFFECTIVE DATE.—The amendment made by this 
section shall apply to years ending after the date of the en-
actment of this Act. 
Subtitle B—Single Family Housing 
SEC. 3011. FIRST-TIME HOMEBUYER CREDIT. 
(a) IN GENERAL.—Subpart C of part IV of subchapter 
A of chapter 1 is amended by redesignating section 36 as 
section 37 and by inserting after section 35 the following 
new section: 
‘‘SEC. 36. FIRST-TIME HOMEBUYER CREDIT. 
‘‘(a) ALLOWANCE OF CREDIT.—In the case of an indi-
vidual who is a first-time homebuyer of a principal resi-
dence in the United States during a taxable year, there shall
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be allowed as a credit against the tax imposed by this sub-
title for such taxable year an amount equal to 10 percent 
of the purchase price of the residence. 
‘‘(b) LIMITATIONS.— 
‘‘(1) DOLLAR LIMITATION.— 
‘‘(A) IN
GENERAL.—Except as otherwise 
provided in this paragraph, the credit allowed 
under subsection (a) shall not exceed $7,500. 
‘‘(B) MARRIED INDIVIDUALS FILING SEPA-
RATELY.—In the case of a married individual 
filing a separate return, subparagraph (A) shall 
be applied by substituting ‘$3,750’ for ‘$7,500’. 
‘‘(C) OTHER INDIVIDUALS.—If two or more 
individuals who are not married purchase a 
principal residence, the amount of the credit al-
lowed under subsection (a) shall be allocated 
among such individuals in such manner as the 
Secretary may prescribe, except that the total 
amount of the credits allowed to all such individ-
uals shall not exceed $7,500. 
‘‘(2) LIMITATION BASED ON MODIFIED ADJUSTED 
GROSS INCOME.— 
‘‘(A) IN GENERAL.—The amount allowable 
as a credit under subsection (a) (determined 
without regard to this paragraph) for the taxable
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year shall be reduced (but not below zero) by the 
amount which bears the same ratio to the 
amount which is so allowable as— 
‘‘(i) the excess (if any) of— 
‘‘(I) the taxpayer’s modified ad-
justed gross income for such taxable 
year, over 
‘‘(II) $75,000 ($150,000 in the 
case of a joint return), bears to 
‘‘(ii) $20,000. 
‘‘(B) MODIFIED
ADJUSTED
GROSS
IN-
COME.—For purposes of subparagraph (A), the 
term ‘modified adjusted gross income’ means the 
adjusted gross income of the taxpayer for the tax-
able year increased by any amount excluded 
from gross income under section 911, 931, or 
933. 
‘‘(c) DEFINITIONS.—For purposes of this section— 
‘‘(1) FIRST-TIME HOMEBUYER.—The term ‘first- 
time homebuyer’ means any individual if such indi-
vidual (and if married, such individual’s spouse) had 
no present ownership interest in a principal residence 
during the 3-year period ending on the date of the 
purchase of the principal residence to which this sec-
tion applies.
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‘‘(2) PRINCIPAL
RESIDENCE.—The term ‘prin-
cipal residence’ has the same meaning as when used 
in section 121. 
‘‘(3) 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 
such property, and 
‘‘(ii) the basis of the property in the 
hands of the person acquiring such property 
is not determined— 
‘‘(I) in whole or in part by ref-
erence to the adjusted basis of such 
property in the hands of the person 
from whom acquired, or 
‘‘(II) under section 1014(a) (relat-
ing to property acquired from a dece-
dent). 
‘‘(B) CONSTRUCTION.—A residence which is 
constructed by the taxpayer shall be treated as 
purchased by the taxpayer on the date the tax-
payer first occupies such residence.
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‘‘(4) PURCHASE
PRICE.—The term ‘purchase 
price’ means the adjusted basis of the principal resi-
dence on the date such residence is purchased. 
‘‘(5) RELATED
PERSONS.—A person shall be 
treated as related to another person if the relationship 
between such persons would result in the disallowance 
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 in-
clude only his spouse, ancestors, and lineal descend-
ants). 
‘‘(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) a credit under section 1400C (relating to 
first-time homebuyer in the District of Columbia) is 
allowable to the taxpayer (or the taxpayer’s spouse) 
for such taxable year or any prior taxable year, 
‘‘(2) the residence is financed by the proceeds of 
a qualified mortgage issue the interest on which is ex-
empt from tax under section 103, 
‘‘(3) the taxpayer is a nonresident alien, or 
‘‘(4) the taxpayer disposes of such residence (or 
such residence ceases to be the principal residence of
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State shall be increased by an amount equal to 
$11,000,000,000 multiplied by a fraction— 
‘‘(i) the numerator of which is the 
State ceiling applicable to the State for cal-
endar year 2008, determined without regard 
to this paragraph, and 
‘‘(ii) the denominator of which is the 
sum of the State ceilings determined under 
clause (i) for all States. 
‘‘(B) SET ASIDE.— 
‘‘(i) IN GENERAL.—Any amount of the 
State ceiling for any State which is attrib-
utable to an increase under this paragraph 
shall be allocated solely for one or more 
qualified housing issues. 
‘‘(ii) QUALIFIED HOUSING ISSUE.—For 
purposes of this paragraph, the term ‘quali-
fied housing issue’ means— 
‘‘(I) an issue described in section 
142(a)(7) (relating to qualified resi-
dential rental projects), or 
‘‘(II) a qualified mortgage issue 
(determined by substituting ‘12-month 
period’ for ‘42-month period’ each
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place 
it 
appears 
in 
section 
143(a)(2)(D)(i)).’’. 
(2) CARRYFORWARD OF UNUSED LIMITATIONS.— 
Subsection (f) of section 146 is amended by adding at 
the end the following new paragraph: 
‘‘(6) SPECIAL RULES FOR INCREASED VOLUME 
CAP UNDER SUBSECTION (d)(5).—No amount which is 
attributable to the increase under subsection (d)(5) 
may be used— 
‘‘(A) for any issue other than a qualified 
housing issue (as defined in subsection (d)(5)), 
or 
‘‘(B) to issue any bond after calendar year 
2010.’’. 
(b) TEMPORARY RULE FOR USE OF QUALIFIED MORT-
GAGE BONDS PROCEEDS
FOR SUBPRIME REFINANCING 
LOANS.— 
(1) IN
GENERAL.—Section 143(k) (relating to 
other definitions and special rules) is amended by 
adding at the end the following new paragraph: 
‘‘(12) 
SPECIAL
RULES
FOR
SUBPRIME 
REFINANCINGS.— 
‘‘(A) IN GENERAL.—Notwithstanding the re-
quirements of subsection (i)(1), the proceeds of a 
qualified mortgage issue may be used to refi-
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nance a mortgage on a residence which was 
originally financed by the mortgagor through a 
qualified subprime loan. 
‘‘(B) SPECIAL
RULES.—In applying sub-
paragraph (A) to any refinancing— 
‘‘(i) subsection (a)(2)(D)(i) shall be ap-
plied by substituting ‘12-month period’ for 
‘42-month period’ each place it appears, 
‘‘(ii) subsection (d) (relating to 3-year 
requirement) shall not apply, and 
‘‘(iii) subsection (e) (relating to pur-
chase price requirement) shall be applied by 
using the market value of the residence at 
the time of refinancing in lieu of the acqui-
sition cost. 
‘‘(C) QUALIFIED
SUBPRIME
LOAN.—The 
term ‘qualified subprime loan’ means an adjust-
able rate single-family residential mortgage loan 
made after December 31, 2001, and before Janu-
ary 1, 2008, that the bond issuer determines 
would be reasonably likely to cause financial 
hardship to the borrower if not refinanced. 
‘‘(D) TERMINATION.—This paragraph shall 
not apply to any bonds issued after December 
31, 2010.’’.
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(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to bonds issued after the date of the en-
actment of this Act. 
SEC. 3022. REPEAL OF ALTERNATIVE MINIMUM TAX LIMITA-
TIONS ON TAX-EXEMPT HOUSING BONDS, 
LOW-INCOME HOUSING TAX CREDIT, AND RE-
HABILITATION CREDIT. 
(a) TAX-EXEMPT INTEREST ON CERTAIN HOUSING 
BONDS EXEMPTED FROM ALTERNATIVE MINIMUM TAX.— 
(1) IN GENERAL.—Subparagraph (C) of section 
57(a)(5) (relating to specified private activity bonds) 
is amended by redesignating clauses (iii) and (iv) as 
clauses (iv) and (v), respectively, and by inserting 
after clause (ii) the following new clause: 
‘‘(iii) EXCEPTION FOR CERTAIN HOUS-
ING BONDS.—For purposes of clause (i), the 
term ‘private activity bond’ shall not in-
clude any bond issued after the date of the 
enactment of this clause if such bond is— 
‘‘(I) an exempt facility bond 
issued as part of an issue 95 percent or 
more of the net proceeds of which are 
to be used to provide qualified residen-
tial rental projects (as defined in sec-
tion 142(d)),
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‘‘(II) a qualified mortgage bond 
(as defined in section 143(a)), or 
‘‘(III) a qualified veterans’ mort-
gage bond (as defined in section 
143(b)). 
The preceding sentence shall not apply to 
any refunding bond unless such preceding 
sentence applied to the refunded bond (or in 
the case of a series of refundings, the origi-
nal bond).’’. 
(2) NO
ADJUSTMENT
TO
ADJUSTED
CURRENT 
EARNINGS.—Subparagraph (B) of section 56(g)(4) is 
amended by adding at the end the following new 
clause: 
‘‘(iii) TAX EXEMPT INTEREST ON CER-
TAIN HOUSING BONDS.—Clause (i) shall not 
apply in the case of any interest on a bond 
to which section 57(a)(5)(C)(iii) applies.’’. 
(b) ALLOWANCE OF LOW-INCOME HOUSING CREDIT 
AGAINST ALTERNATIVE MINIMUM TAX.—Subparagraph (B) 
of section 38(c)(4) (relating to specified credits) is amended 
by redesignating clauses (ii) through (iv) as clauses (iii) 
through (v) and inserting after clause (i) the following new 
clause:
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‘‘(ii) the credit determined under sec-
tion 42 to the extent attributable to build-
ings placed in service after December 31, 
2007,’’. 
(c) ALLOWANCE OF REHABILITATION CREDIT AGAINST 
ALTERNATIVE MINIMUM TAX.—Subparagraph (B) of sec-
tion 38(c)(4), as amended by subsection (b), is amended by 
striking ‘‘and’’ at the end of clause (iv), by redesignating 
clause (v) as clause (vi), and by inserting after clause (iv) 
the following new clause: 
‘‘(v) the credit determined under sec-
tion 47 to the extent attributable to quali-
fied rehabilitation expenditures properly 
taken into account for periods after Decem-
ber 31, 2007, and’’. 
(d) EFFECTIVE DATE.— 
(1) HOUSING
BONDS.—The amendments made 
by subsection (a) shall apply to bonds issued after the 
date of the enactment of this Act. 
(2) LOW INCOME HOUSING CREDIT.—The amend-
ments made by subsection (b) shall apply to credits 
determined under section 42 of the Internal Revenue 
Code of 1986 to the extent attributable to buildings 
placed in service after December 31, 2007.
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(c) EXEMPTION NOT TO APPLY IF KNOWLEDGE OR 
NOTICE THAT AFFIDAVIT OR STATEMENT IS FALSE.— 
(1) IN
GENERAL.—Paragraph (7) of section 
1445(b) (relating to special rules for paragraphs (2) 
and (3)) is amended to read as follows: 
‘‘(7) SPECIAL RULES FOR PARAGRAPHS (2), (3), 
AND (9).—Paragraph (2), (3), or (9) (as the case may 
be) shall not apply to any disposition— 
‘‘(A) if— 
‘‘(i) the transferee or qualified sub-
stitute has actual knowledge that the affi-
davit referred to in such paragraph, or the 
statement 
referred 
to 
in 
paragraph 
(9)(A)(ii), is false, or 
‘‘(ii) the transferee or qualified sub-
stitute receives a notice (as described in sub-
section (d)) from a transferor’s agent, trans-
feree’s agent, or qualified substitute that 
such affidavit or statement is false, or 
‘‘(B) if the Secretary by regulations requires 
the transferee or qualified substitute to furnish a 
copy of such affidavit or statement to the Sec-
retary and the transferee or qualified substitute 
fails to furnish a copy of such affidavit or state-
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•HR 3221 EAH2 
ment to the Secretary at such time and in such 
manner as required by such regulations.’’. 
(2) LIABILITY.— 
(A) NOTICE.—Paragraph (1) of section 
1445(d) (relating to notice of false affidavit; for-
eign corporations) is amended to read as follows: 
‘‘(1) NOTICE
OF
FALSE
AFFIDAVIT; FOREIGN 
CORPORATIONS.—If— 
‘‘(A) the transferor furnishes the transferee 
or qualified substitute an affidavit described in 
paragraph (2) of subsection (b) or a domestic 
corporation furnishes the transferee an affidavit 
described in paragraph (3) of subsection (b), and 
‘‘(B) in the case of— 
‘‘(i) any transferor’s agent— 
‘‘(I) such agent has actual knowl-
edge that such affidavit is false, or 
‘‘(II) in the case of an affidavit 
described in subsection (b)(2) furnished 
by a corporation, such corporation is a 
foreign corporation, or 
‘‘(ii) any transferee’s agent or qualified 
substitute, such agent or substitute has ac-
tual knowledge that such affidavit is false,
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•HR 3221 EAH2 
such agent or qualified substitute shall so notify 
the transferee at such time and in such manner 
as the Secretary shall require by regulations.’’. 
(B) FAILURE TO FURNISH NOTICE.—Para-
graph (2) of section 1445(d) (relating to failure 
to furnish notice) is amended to read as follows: 
‘‘(2) FAILURE TO FURNISH NOTICE.— 
‘‘(A) IN
GENERAL.—If any transferor’s 
agent, transferee’s agent, or qualified substitute 
is required by paragraph (1) to furnish notice, 
but fails to furnish such notice at such time or 
times and in such manner as may be required 
by regulations, such agent or substitute shall 
have the same duty to deduct and withhold that 
the transferee would have had if such agent or 
substitute had complied with paragraph (1). 
‘‘(B) LIABILITY
LIMITED
TO
AMOUNT
OF 
COMPENSATION.—An agent’s or substitute’s li-
ability under subparagraph (A) shall be limited 
to the amount of compensation the agent or sub-
stitute derives from the transaction.’’. 
(C) CONFORMING AMENDMENT.—The head-
ing for section 1445(d) is amended by striking 
‘‘OR TRANSFEREE’S AGENTS’’ and inserting ‘‘,
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TRANSFEREE’S AGENTS, OR QUALIFIED SUB-
STITUTES’’. 
(d) EFFECTIVE DATE.—The amendments made by this 
section shall apply to dispositions of United States real 
property interests after the date of the enactment of this 
Act. 
SEC. 3025. MODIFICATION OF DEFINITION OF TAX-EXEMPT 
USE PROPERTY FOR PURPOSES OF THE RE-
HABILITATION CREDIT. 
(a) 
IN
GENERAL.—Subclause 
(I) 
of 
section 
47(c)(2)(B)(v) is amended by striking ‘‘section 168(h)’’ and 
inserting ‘‘section 168(h), except that ‘50 percent’ shall be 
substituted for ‘35 percent’ in paragraph (1)(B)(iii) there-
of’’. 
(b) EFFECTIVE DATE.—The amendments made by this 
section shall apply to expenditures properly taken into ac-
count for periods after December 31, 2007. 
SEC. 3026. EXTENSION OF SPECIAL RULE FOR MORTGAGE 
REVENUE BONDS FOR RESIDENCES LOCATED 
IN DISASTER AREAS. 
(a) IN GENERAL.—Paragraph (11) of section 143(k) 
is amended— 
(1) by striking ‘‘December 31, 1996’’ and insert-
ing ‘‘May 1, 2008’’, and
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(2) by striking ‘‘January 1, 1999’’ and inserting 
‘‘January 1, 2010’’. 
(b) EFFECTIVE DATE.—The amendments made by this 
section shall apply to bonds issued after May 1, 2008. 
SEC. 3027. TRANSFER OF FUNDS APPROPRIATED TO CARRY 
OUT 2008 RECOVERY REBATES FOR INDIVID-
UALS. 
Of the funds made available by section 101(e)(1)(A) 
of the Economic Stimulus Act of 2008 (Public Law 110- 
185), the Secretary of the Treasury may transfer funds 
among the accounts specified in such section to carry out 
section 6428 of the Internal Revenue Code of 1986. The Sec-
retary shall provide advance notification of any such trans-
fer to the Committees on Appropriations of the House of 
Representatives and the Senate, and any transfer greater 
than $5,000,000 shall be subject to the approval of such 
Committees. 
TITLE II—REFORMS RELATED TO 
REAL 
ESTATE 
INVESTMENT 
TRUSTS 
Subtitle A—Foreign Currency and 
Other Qualified Activities 
SEC. 3031. REVISIONS TO REIT INCOME TESTS. 
(a) FOREIGN CURRENCY GAINS NOT GROSS INCOME 
IN APPLYING REIT INCOME TESTS.—Section 856 (defining