the Hurricane Katrina disaster area, there shall be al-
lowed as a credit against the tax imposed by this chapter 
for the taxable year an amount equal to so much of the 
purchase price of the residence as does not exceed $5,000. 
‘‘(b) LIMITATION BASED ON MODIFIED ADJUSTED 
GROSS INCOME.— 
‘‘(1) IN GENERAL.—The amount allowable as a 
credit under subsection (a) (determined without re-
gard to this subsection and subsection (d)) for the 
taxable year shall be reduced (but not below zero) by 
the amount which bears the same ratio to the credit 
so allowable as— 
‘‘(A) the excess (if any) of— 
‘‘(i) the taxpayer’s modified adjusted 
gross income for such taxable year, over 
‘‘(ii) $70,000 ($110,000 in the case of 
a joint return), bears to 
‘‘(B) $20,000. 
‘‘(2) MODIFIED
ADJUSTED
GROSS
INCOME.— 
For purposes of paragraph (1), the term ‘modified 
adjusted gross income’ means the adjusted gross in-
come of the taxpayer for the taxable year increased 
by any amount excluded from gross income under 
section 911, 931, or 933.
‘‘(c) ELIGIBLE HOMEBUYER.—For purposes of this 
section— 
‘‘(1) IN GENERAL.—The term ‘eligible home-
buyer’ means any individual if— 
‘‘(A) on August 29, 2005, the principal 
place of abode of such individual (and if mar-
ried, such individual’s spouse) was located in 
the Hurricane Katrina disaster area, and such 
principal place of abode was rendered uninhab-
itable by Hurricane Katrina, and 
‘‘(B) the principal residence for which the 
credit is allowed under subsection (a) is located 
in the same State as such principal place of 
abode. 
‘‘(2) ONE-TIME ONLY.—If an individual is al-
lowed a credit under this section with respect to any 
principal residence, such individual may not be al-
lowed a credit under this section with respect to any 
other principal residence. 
‘‘(3) PRINCIPAL RESIDENCE.—The term ‘prin-
cipal residence’ has the same meaning as when used 
in section 121. 
‘‘(d) CARRYOVER OF CREDIT.—If the credit allowable 
under subsection (a) 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 sections 23, 24, 25B, and 1400C) such excess 
shall be carried to the succeeding taxable year and added 
to the credit allowable under subsection (a) for such tax-
able year. 
‘‘(e) OTHER DEFINITIONS AND SPECIAL RULES.— 
For purposes of this section— 
‘‘(1) HURRICANE KATRINA DISASTER AREA.— 
The term ‘Hurricane Katrina disaster area’ means 
an area determined by the President to warrant as-
sistance from the Federal Government under the 
Robert T. Stafford Disaster Relief and Emergency 
Assistance Act by reason of Hurricane Katrina. 
‘‘(2) ALLOCATION OF DOLLAR LIMITATION.— 
‘‘(A) MARRIED INDIVIDUALS FILING SEPA-
RATELY.—In the case of a married individual 
filing a separate return, subsection (a) shall be 
applied by substituting ‘$2,500’ for ‘$5,000’. 
‘‘(B) OTHER TAXPAYERS.—If 2 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