To amend the Internal Revenue Code of 1986 to provide a credit against tax for natural disaster mitigation expenditures.

SECTION 1. SHORT TITLE.

    (a) Short Title.--This Act may be cited as the ``Natural Disaster 
Mitigation Act of 2011''.

SEC. 2. NONREFUNDABLE PERSONAL CREDIT FOR NATURAL DISASTER MITIGATION 
              PROPERTY.

    (a) In General.--Subpart A of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by inserting after 
section 25D the following new section:

``SEC. 25E. NATURAL DISASTER MITIGATION PROPERTY.

    ``(a) Allowance of Credit.--In the case of an individual, there 
shall be allowed as a credit against the tax imposed by this chapter 
for the taxable year an amount equal to 25 percent of the qualified 
natural disaster mitigation property expenditures made by the taxpayer 
during such taxable year in connection with a qualified principal 
residence of the taxpayer.
    ``(b) Maximum Credit.--The credit allowed under subsection (a) with 
respect to any principal residence of the taxpayer for any taxable year 
shall not exceed the excess of--
            ``(1) $5,000 (half such amount in the case of a married 
        individual filing a separate return), over
            ``(2) the aggregate amounts allowed as a credit under this 
        section to the taxpayer (or the taxpayer's spouse) with respect 
        to such residence for all prior taxable years.
    ``(c) Limitation Based on Amount of Tax.--In the case of a taxable 
year to which section 26(a)(2) does not apply, the credit allowed under 
subsection (a) for any taxable year shall not exceed the excess of--
            ``(1) the sum of the regular tax liability (as defined in 
        section 26(b)) plus the tax imposed by section 55, over
            ``(2) the sum of the credits allowable under this subpart 
        (other than this section and sections 23, 24, and 25B) and 
        section 27 for the taxable year.
    ``(d) Qualified Natural Disaster Mitigation Property Expenditure.--
For purposes of this section, the term `qualified natural disaster 
mitigation property expenditure' means an expenditure for--
            ``(1) property to improve the strength of a roof deck 
        attachment,
            ``(2) property to create a secondary water barrier to 
        prevent water intrusion,
            ``(3) property to improve the durability of a roof 
        covering,
            ``(4) property to brace gable-end walls,
            ``(5) property to reinforce the connection between a roof 
        and supporting wall,
            ``(6) property to protect openings from penetration by 
        windborne debris,
            ``(7) property to protect exterior doors and garages,
            ``(8) property to improve the natural resiliency of the 
        property, including the restoration, establishment, or 
        enhancement of aquatic resources (having the meanings given 
        such terms by part 332 of title 33 of the Code of Federal 
        Regulations), as prescribed by the Secretary after consultation 
        with the Administrator of the Environmental Protection Agency 
        and the Assistant Secretary of the Army for Civil Works,
            ``(9) seismic retrofitting, including property to increase 
        resistance to seismic activity, ground motion, or soil failure 
        due to earthquakes, or
            ``(10) such other measures to mitigate natural disaster 
        damage to homes, as prescribed by the Secretary after 
        consultation with the Administrator of the Federal Emergency 
        Management Agency and, to the extent applicable, in accordance 
        with section 12(d) of the National Technology Transfer and 
        Advancement Act of 1995 (15 U.S.C. 272 note; Public Law 104-
        113).
    ``(e) Qualified Principal Residence.--For purposes of this section, 
the term `qualified pricnipal residence' means the principal residence 
of the taxpayer (within the meaning of section 121) if such residence--
            ``(1) is assessed by the locality in which it is located at 
        a value which does not exceed 300 percent of the national 
        median home price (determined as of the close of the taxable 
        year for which the credit determined under this section is 
        allowed), and
            ``(2) is not severe repetitive loss property (as defined in 
        section 1361A of the National Flood Insurance Act (42 U.S.C. 
        4102a(b))).
    ``(f) Rules Related to Inspections and Labor Costs.--For purposes 
of this section--
            ``(1) Inspection requirement.--An expenditure shall be 
        taken into account in determining the qualified natural 
        disaster mitigation property expenditures made by the taxpayer 
        during the taxable year only if the installation of the 
        property with respect to which such expenditure is made has 
        been completed in a manner that is deemed to be adequate by an 
        inspector that is licensed or certified by the State or other 
        governmental authority, or its designee, having jurisdiction 
        over inspectors in the area where the installed property is 
        located.
            ``(2) Labor and inspection costs.--For purposes of this 
        section, expenditures for labor costs properly allocable to the 
        onsite preparation, assembly, or original installation of the 
        property described in subsection (d) (including the cost of 
        inspections referred to in paragraph (1)) shall be taken into 
        account in determining the qualified natural disaster 
        mitigation property expenditures made by the taxpayer during 
        the taxable year.
    ``(g) Basis Adjustment.--For purposes of this section, if a credit 
is allowed under this section for any expenditure with respect to any 
property, the increase in the basis of such property which would (but 
for this subsection) result from such expenditure shall be reduced by 
the amount of the credit so allowed.''.
    (b) Conforming 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 relating to section 25D the following new 
item:

``Sec. 25E. Natural disaster mitigation property.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2011.

Summary: Natural Disaster Mitigation Act of 2011 - Amends the Internal Revenue Code to allow individual taxpayers a nonrefundable tax credit for 25% of their qualified natural disaster mitigation property expenditures, as defined by this Act, made in connection with the taxpayer's principal residence.