I 
111TH CONGRESS 
1ST SESSION H. R. 3640 
To amend the Internal Revenue Code of 1986 to extend and expand the 
first-time homebuyers credit and to provide a loss deduction on the 
sale of a principal residence. 
IN THE HOUSE OF REPRESENTATIVES 
SEPTEMBER 24, 2009 
Mr. CHILDERS (for himself and Mr. KRATOVIL) 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 extend 
and expand the first-time homebuyers credit and to pro-
vide a loss deduction on the sale of a principal residence. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. HOMEBUYER CREDIT ALLOWED FOR ANY PUR-
CHASE OF PRINCIPAL RESIDENCE. 
(a) IN GENERAL.—Subsection (a) of section 36 of the 
Internal Revenue Code of 1986 is amended by striking 
‘‘who is a first-time homebuyer of a principal residence’’ 
and inserting ‘‘who purchases a principal residence’’. 
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(b) APPLICATION TO ONLY 1 SALE.—Subsection (b) 
of section 36 of such Code is amended by adding at the 
end the following new paragraph: 
‘‘(3) APPLICATION TO ONLY 1 SALE.— 
‘‘(A) IN
GENERAL.—Subsection (a) shall 
not apply to more than 1 sale or exchange of 
a principal residence by the individual. 
‘‘(B) SPECIAL
RULE
FOR
JOINT
RE-
TURNS.—In the case of a joint return with re-
spect to the sale or exchange of a principal resi-
dence, if a credit was allowable under sub-
section (a) to a spouse for a prior sale or ex-
change of a principal residence, paragraph (1) 
shall be applied by reducing the $8,000 in sub-
paragraph (A) thereof and the $4,000 in sub-
paragraph (B) thereof by the credit so allowable 
(one-half of such credit in the case of a joint re-
turn).’’. 
(c) CONFORMING AMENDMENTS.— 
(1) Subsection (c) of section 36 of such Code 
is amended by striking paragraph (1) (defining first- 
time homebuyer) and by redesignating paragraphs 
(2), (3), (4), and (5) as paragraphs (1), (2), (3), 
and (4), respectively. 
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sections (c) and (f)(4)(D)), a taxpayer may elect to treat 
a purchase of a principal residence— 
‘‘(1) after December 31, 2008, and before Jan-
uary 1, 2010, as made on December 31, 2008, and 
‘‘(2) after December 31, 2009, and before De-
cember 1, 2010, as made on December 31, 2009.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall take effect on the date of the enactment 
of this Act. 
SEC. 3. DEDUCTION FOR LOSS FROM SALE OF PRINCIPAL 
RESIDENCE. 
(a) IN GENERAL.—Part VII of subchapter B of chap-
ter I of the Internal Revenue Code of 1986 (relating to 
additional itemized deductions for individuals) is amended 
by redesignating section 224 as section 225 and by insert-
ing after section 223 the following new section: 
‘‘SEC. 224. LOSS FROM SALE OF PRINCIPAL RESIDENCE. 
‘‘(a) ALLOWANCE OF DEDUCTION.—In the case of an 
individual, there shall be allowed as a deduction for the 
taxable year any loss recognized on the sale or exchange 
of property during the taxable year if, during the 5-year 
period ending on the date of the sale or exchange, such 
property has been owned and used by the taxpayer as the 
taxpayer’s principal residence for periods aggregating 2 
years or more. 
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‘‘(b) LIMITATIONS.— 
‘‘(1) AGGREGATE LIMITATION.—The aggregate 
amount allowed as a deduction under subsection (a) 
for all taxable years shall not exceed $6,000 
($12,000 in the case of a joint return). 
‘‘(2) ANNUAL LIMITATION.— 
‘‘(A) IN GENERAL.—The amount allowed 
to a taxpayer as a deduction under subsection 
(a) for a taxable year shall not exceed $2,000 
($4,000 in the case of a joint return). 
‘‘(B) CARRYFORWARD.—If the deduction 
allowable under subsection (a) for any taxable 
year exceeds the limitation imposed by subpara-
graph (A) for the taxable year, the excess shall 
be carried to each of the 2 succeeding taxable 
years and added to the deduction allowable 
under subsection (a) for such succeeding year. 
‘‘(3) EXCLUSION OF LOSS ALLOCATED TO NON-
QUALIFIED USE.— 
‘‘(A) IN
GENERAL.—Subsection (a) shall 
not apply to so much of the loss from the sale 
or exchange of property as is allocated to peri-
ods of nonqualified use. 
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‘‘(B) ALLOCATION.—For purposes of sub-
paragraph (A), loss shall be allocated to periods 
of nonqualified use based on the ratio which— 
‘‘(i) the aggregate periods of non-
qualified use during the period such prop-
erty was owned by the taxpayer, bears to 
‘‘(ii) the period such property was 
owned by the taxpayer. 
‘‘(C) PERIOD OF NONQUALIFIED USE; CO-
ORDINATION WITH RECOGNITION OF GAIN AT-
TRIBUTABLE TO DEPRECIATION.—For purposes 
of this paragraph, rules similar to the rules of 
subparagraphs (C) and (D) of section 121(b)(5) 
shall apply. 
‘‘(4) APPLICATION TO ONLY 1 SALE.— 
‘‘(A) IN
GENERAL.—Subsection (a) shall 
not apply to more than 1 sale or exchange of 
a principal residence by the taxpayer. 
‘‘(B) SPECIAL
RULE
FOR
JOINT
RE-
TURNS.—In the case of a joint return with re-
spect to the sale or exchange of a principal resi-
dence, if a deduction was allowable under sub-
section (a) to a spouse for a prior sale or ex-
change of a principal residence, paragraphs (1) 
and (2)(A) shall be applied by reducing the dol-
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lar amounts therein by the deduction so allow-
able (one-half of such deduction in the case of 
a joint return). 
‘‘(c) APPLICABLE RULES.—For purposes of this sec-
tion, rules similar to the rules of subsection (d) of section 
121 shall apply, except that paragraph (6) thereof shall 
be applied by substituting ‘loss’ for ‘gain’. 
‘‘(d) ELECTION TO HAVE SECTION NOT APPLY.— 
This section shall not apply to any sale or exchange with 
respect to which the taxpayer elects not to have this sec-
tion apply. 
‘‘(e) TERMINATION.—The section shall not apply to 
the sale or exchange of a principal residence after Decem-
ber 31, 2010.’’. 
(b) DEDUCTION
ALLOWED
IN
COMPUTING
AD-
JUSTED GROSS INCOME.—Subsection (a) of section 62 of 
such Code is amended by inserting before the last sentence 
the following new paragraph: 
‘‘(22) LOSS FROM SALE OF PRINCIPAL RESI-
DENCE.—The deduction allowed by section 224.’’. 
(c) CLERICAL AMENDMENTS.—The table of sections 
for part VII of subchapter B of chapter 1 of such Code 
is amended by striking the item relating to section 224 
and inserting the following: 
‘‘Sec. 224. Loss from sale of principal residence. 
‘‘Sec. 225. Cross reference.’’. 
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(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2008. 
Æ 
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