To amend the Internal Revenue Code of 1986 to provide temporary housing related tax relief for individuals, and for other purposes.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Keep Our Homes Act of 2008''.

SEC. 2. TEMPORARY DEDUCTION FOR CERTAIN MORTGAGE COUNSELING.

    (a) In General.--Part VII of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to additional itemized 
deductions) is amended by redesignating section 224 as section 225 and 
by inserting after section 223 the following new section:

``SEC. 224. CERTAIN MORTGAGE COUNSELING.

    ``(a) In General.--In the case of an individual, there shall be 
allowed as a deduction an amount equal to the amount paid or incurred 
by the taxpayer during the taxable year for qualified mortgage 
counseling.
    ``(b) Limitation.--The deduction allowed under subsection (a) shall 
not exceed $500 for any taxable year.
    ``(c) Qualified Mortgage Counseling.--For purposes of this section, 
the term `qualified mortgage counseling' means any mortgage counseling 
provided by an organization accredited by the Federal Housing 
Administration to provide such counseling if such counseling is 
obtained before the issuance of the loan with respect to which such 
counseling relates. Such term shall not include any counseling if such 
counseling is provided with respect to a loan which is not secured by 
the principal residence (within the meaning of section 121) of the 
taxpayer.
    ``(d) Termination.--The deduction under this section shall not be 
allowed with respect to any amount paid or incurred after December 31, 
2012.''.
    (b) Deduction Allowed in Computing Adjusted Gross Income.--
Subsection (a) of section 62 of such Code is amended by inserting 
before the last sentence the following new paragraph:
            ``(21) Certain mortgage counseling.--The deduction allowed 
        by section 224.''.
    (c) Clerical Amendment.--The table of sections for part VII of 
subchapter B of chapter 1 of such Code is amended by redesignating the 
item relating to section 224 as an item relating to section 225 and 
inserting before such item the following new item:

``Sec. 224. Certain mortgage counseling.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2007.

SEC. 3. TEMPORARY DEDUCTION FOR UPSIDE DOWN MORTGAGES.

    (a) In General.--Part VII of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to additional itemized 
deductions), as amended by this Act, is amended by redesignating 
section 225 as section 226 and by inserting after section 224 the 
following new section:

``SEC. 225. UPSIDE DOWN MORTGAGES.

    ``(a) In General.--In the case of an individual, there shall be 
allowed as a deduction an amount equal to 20 percent of the excess (if 
any) of--
            ``(1) the acquisition indebtedness (within the meaning of 
        section 163) as determined at the close of the taxable year 
        with respect to the principal residence (within the meaning of 
        section 121) of the taxpayer, over
            ``(2) the valuation (as in effect at the close of such 
        taxable year) of such residence as determined for purposes of 
        State and local real property tax assessments.
    ``(b) Limitation.--The deduction allowed under subsection (a) shall 
not exceed $5,000 for any taxable year.
    ``(c) Denial of Benefit for Fraudulently Obtained Mortgages.--
Acquisition indebtedness shall not be taken into account under 
subsection (a) if material misstatements were made by the taxpayer in 
obtaining such indebtedness.
    ``(d) Termination.--The deduction under this section shall not be 
allowed with respect to any amount paid or incurred after December 31, 
2009.''.
    (b) Deduction Allowed in Computing Adjusted Gross Income.--
Subsection (a) of section 62 of such Code, as amended by this Act, is 
amended by inserting before the last sentence the following new 
paragraph:
            ``(22) Upside down mortgages.--The deduction allowed by 
        section 224.''.
    (c) Clerical Amendment.--The table of sections for part VII of 
subchapter B of chapter 1 of such Code, as amended by this Act, is 
amended by redesignating the item relating to section 225 as an item 
relating to section 226 and inserting before such item the following 
new item:

``Sec. 225. Upside down mortgages.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2007.

SEC. 4. TEMPORARY CREDIT FOR CERTAIN HOME PURCHASES.

    (a) Allowance of Credit.--Subpart A of part IV of subchapter A of 
chapter 1 of the Internal Revenue Code of 1986 (relating to 
nonrefundable personal credits) is amended by inserting after section 
25D the following new section:

``SEC. 25E. CREDIT FOR CERTAIN HOME PURCHASES.

    ``(a) Allowance of Credit.--
            ``(1) In general.--In the case of an individual who is a 
        purchaser of a qualified principal residence during the taxable 
        year, there shall be allowed as a credit against the tax 
        imposed by this chapter an amount equal to the lesser of--
                    ``(A) 10 percent of the purchase price of the 
                residence, or
                    ``(B) $7,500 ($9,000 if such residence is in a high 
                cost area (as determined by the Secretary of Housing 
                and Urban Development)).
            ``(2) Allocation of credit amount.--The amount of the 
        credit allowed under paragraph (1) shall be equally divided 
        among the 2 taxable years beginning with the taxable year in 
        which the purchase of the qualified principal residence is 
        made.
    ``(b) Limitations.--
            ``(1) Date of purchase.--The credit allowed under 
        subsection (a) shall be allowed only with respect to purchases 
        made--
                    ``(A) after the date of the enactment of this 
                section, and
                    ``(B) before the date that is 12 months after such 
                date.
            ``(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 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 
                                adjusted gross income for such taxable 
                                year, over
                                    ``(II) $70,000 ($140,000 in the 
                                case of a joint return), bears to
                            ``(ii) $20,000.
                    ``(B) Modified adjusted gross income.--For purposes 
                of subparagraph (A), the term `modified adjusted gross 
                income' means the adjusted gross income of the taxpayer 
                for the taxable year increased by any amount excluded 
                from gross income under section 911, 931, or 933.
            ``(3) 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--
                    ``(A) the sum of the regular tax liability (as 
                defined in section 26(b)) plus the tax imposed by 
                section 55, over
                    ``(B) the sum of the credits allowable under this 
                subpart (other than this section and section 23) for 
                the taxable year.
            ``(4) One-time only.--
                    ``(A) In general.--If a credit is allowed under 
                this section in the case of any individual (and such 
                individual's spouse, if married) with respect to the 
                purchase of any qualified principal residence, no 
                credit shall be allowed under this section in any 
                taxable year with respect to the purchase of any other 
                qualified principal residence by such individual or a 
                spouse of such individual.
                    ``(B) Joint purchase.--In the case of a purchase of 
                a qualified principal residence by 2 or more unmarried 
                individuals or by 2 married individuals filing 
                separately, no credit shall be allowed under this 
                section if a credit under this section has been allowed 
                to any of such individuals in any taxable year with 
                respect to the purchase of any other qualified 
                principal residence.
    ``(c) Qualified Principal Residence.--For purposes of this 
section--
            ``(1) In general.--The term `qualified principal residence' 
        means any residence that is purchased to be the principal 
        residence of the purchaser.
            ``(2) Principal residence.--The term `principal residence' 
        has the same meaning as when used in section 121.
    ``(d) Denial of Double Benefit.--No credit shall be allowed under 
this section for any purchase for which a credit is allowed under 
section 1400C.
    ``(e) Recapture in the Case of Certain Dispositions.--In the event 
that a taxpayer--
            ``(1) disposes of the qualified principal residence with 
        respect to which a credit is allowed under subsection (a), or
            ``(2) fails to occupy such residence as the taxpayer's 
        principal residence,
at any time within 24 months after the date on which the taxpayer 
purchased such residence, then the remaining portion of the credit 
allowed under subsection (a) shall be disallowed in the taxable year 
during which such disposition occurred or in which the taxpayer failed 
to occupy the residence as a principal residence, and in any subsequent 
taxable year in which the remaining portion of the credit would, but 
for this subsection, have been allowed.
    ``(f) Special Rules.--
            ``(1) Joint purchase.--
                    ``(A) Married individuals filing separately.--In 
                the case of 2 married individuals filing separately, 
                subsection (a) shall be applied to each such individual 
                by substituting `$3,500' for `$7,000' in paragraph (1) 
                thereof.
                    ``(B) Unmarried individuals.--If 2 or more 
                individuals who are not married purchase a qualified 
                principal residence, the amount of the credit allowed 
                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 individuals shall not exceed 
                $7,000.
            ``(2) Purchase; purchase price.--Rules similar to the rules 
        of paragraphs (2) and (3) of section 1400C(e) (as in effect on 
        the date of the enactment of this section) shall apply for 
        purposes of this section.
            ``(3) Reporting requirement.--Rules similar to the rules of 
        section 1400C(f) (as so in effect) shall apply for purposes of 
        this section.
    ``(g) Basis Adjustment.--For purposes of this subtitle, if a credit 
is allowed under this section with respect to the purchase of any 
residence, the basis of such residence shall be reduced by the amount 
of the credit so allowed.''.
    (b) Conforming Amendments.--
            (1) Section 24(b)(3)(B) of the Internal Revenue Code of 
        1986 is amended by striking ``and 25B'' and inserting ``, 25B, 
        and 25E''.
            (2) Section 25(e)(1)(C)(ii) of such Code is amended by 
        inserting ``25E,'' after ``25D,''.
            (3) Section 25B(g)(2) of such Code is amended by striking 
        ``section 23'' and inserting ``sections 23 and 25E''.
            (4) Section 25D(c)(2) of such Code is amended by striking 
        ``and 25B'' and inserting ``25B, and 25E''.
            (5) Section 26(a)(1) of such Code is amended by striking 
        ``and 25B'' and inserting ``25B, and 25E''.
            (6) Section 904(i) of such Code is amended by striking 
        ``and 25B'' and inserting ``25B, and 25E''.
            (7) Subsection (a) of section 1016 of such Code is amended 
        by striking ``and'' at the end of paragraph (36), by striking 
        the period at the end of paragraph (37) and inserting ``, 
        and'', and by adding at the end the following new paragraph:
            ``(38) to the extent provided in section 25E(g).''.
            (8) Section 1400C(d)(2) of such Code is amended by striking 
        ``and 25D'' and inserting ``25D, and 25E''.
    (c) Clerical Amendment.--The table of sections for subpart A of 
part IV of subchapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by inserting after the item relating to section 25D the 
following new item:

``Sec. 25E. Credit for certain home purchases.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to purchases in taxable years ending after the date of the 
enactment of this Act.
    (e) Application of EGTRRA Sunset.--The amendment made by subsection 
(b)(1) shall be subject to title IX of the Economic Growth and Tax 
Relief Reconciliation Act of 2001 in the same manner as the provisions 
of such Act to which such amendment relates.

SEC. 5. TEMPORARY ADDITIONAL STANDARD DEDUCTION FOR REAL PROPERTY TAXES 
              FOR NONITEMIZERS.

    (a) In General.--Section 63(c)(1) of the Internal Revenue Code of 
1986 (defining standard deduction) is amended by striking ``and'' at 
the end of subparagraph (A), by striking the period at the end of 
subparagraph (B) and inserting ``, and'', and by adding at the end the 
following new subparagraph:
                    ``(C) in the case of any taxable year beginning in 
                2008 or 2009, the real property tax deduction.''.
    (b) Definition.--Section 63(c) of the Internal Revenue Code of 1986 
is amended by adding at the end the following new paragraph:
            ``(8) Real property tax deduction.--
                    ``(A) In general.--For purposes of paragraph (1), 
                the real property tax deduction is so much of the 
                amount of the eligible State and local real property 
                taxes paid or accrued by the taxpayer during the 
                taxable year which do not exceed $500 ($1,000 in the 
                case of a joint return).
                    ``(B) Eligible state and local real property 
                taxes.--For purposes of subparagraph (A), the term 
                `eligible State and local real property taxes' means 
                State and local real property taxes (within the meaning 
                of section 164), but only if the rate of tax for all 
                residential real property taxes in the jurisdiction has 
                not been increased at any time after April 2, 2008, and 
                before January 1, 2009.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2007.

SEC. 6. TEMPORARY EXCLUSION OF UNEMPLOYMENT COMPENSATION FROM GROSS 
              INCOME.

    (a) In General.--Section 85 of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new subsection:
    ``(c) Temporary Exclusion.--Notwithstanding subsection (a), in the 
case of unemployment compensation received by an individual during 2008 
or 2009, gross income shall not include such compensation.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to amounts received after December 31, 2007.

Summary: Keep Our Homes Act of 2008 - Amends the Internal Revenue Code to allow: (1) a tax deduction through 2012 for mortgage counseling costs; (2) a tax deduction through 2009 for amounts, up to $5,000, of mortgage indebtedness in excess of the assessed value of a principal residence; (3) a one-time tax credit for a percentage of the purchase price of a principal residence; (4) nonitemizing taxpayers a tax deduction in 2008 or 2009 for real property taxes; and (5) an exclusion from gross income for unemployment compensation received in 2008 or 2009.