To amend the Internal Revenue Code of 1986 to expand the application of the homebuyer credit, and for other purposes.

SECTION 1. EXPANSION AND MODIFICATION OF HOMEBUYER CREDIT.

    (a) Elimination of First-Time Homebuyer Requirement.--
            (1) 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''.
            (2) Conforming amendments.--
                    (A) Subsection (c) of section 36 of such Code is 
                amended by striking paragraph (1) and by redesignating 
                paragraphs (2), (3), (4), and (5) as paragraphs (1), 
                (2), (3), and (4), respectively.
                    (B) Section 36 of such Code is amended by striking 
                ``first-time homebuyer credit'' in the heading and 
                inserting ``home purchase credit''.
                    (C) The table of sections for subpart C of part IV 
                of subchapter A of chapter 1 of such Code is amended by 
                striking the item relating to section 36 and inserting 
                the following new item:

``Sec. 36. Home purchase credit.''.
                    (D) Subparagraph (W) of section 26(b)(2) of such 
                Code is amended by striking ``homebuyer credit'' and 
                inserting ``home purchase credit''.
    (b) Elimination of Recapture Except for Homes Sold Within 3 
Years.--Subsection (f) of section 36 of the Internal Revenue Code of 
1986 is amended to read as follows:
    ``(f) Recapture of Credit in the Case of Certain Dispositions.--
            ``(1) In general.--In the event that a taxpayer--
                    ``(A) disposes of the principal residence with 
                respect to which a credit was allowed under subsection 
                (a), or
                    ``(B) fails to occupy such residence as the 
                taxpayer's principal residence,
        at any time within 36 months after the date on which the 
        taxpayer purchased such residence, then the tax imposed by this 
        chapter for the taxable year during which such disposition 
        occurred or in which the taxpayer failed to occupy the 
        residence as a principal residence shall be increased by the 
        amount of such credit.
            ``(2) Exceptions.--
                    ``(A) Death of taxpayer.--Paragraph (1) shall not 
                apply to any taxable year ending after the date of the 
                taxpayer's death.
                    ``(B) Involuntary conversion.--Paragraph (1) shall 
                not apply in the case of a residence which is 
                compulsorily or involuntarily converted (within the 
                meaning of section 1033(a)) if the taxpayer acquires a 
                new principal residence within the 2-year period 
                beginning on the date of the disposition or cessation 
                referred to in such paragraph. Paragraph (1) shall 
                apply to such new principal residence during the 
                remainder of the 36-month period described in such 
                paragraph as if such new principal residence were the 
                converted residence.
                    ``(C) Transfers between spouses or incident to 
                divorce.--In the case of a transfer of a residence to 
                which section 1041(a) applies--
                            ``(i) paragraph (1) shall not apply to such 
                        transfer, and
                            ``(ii) in the case of taxable years ending 
                        after such transfer, paragraph (1) shall apply 
                        to the transferee in the same manner as if such 
                        transferee were the transferor (and shall not 
                        apply to the transferor).
                    ``(D) Relocation of members of the armed forces.--
                Paragraph (1) shall not apply in the case of a member 
                of the Armed Forces of the United States on active duty 
                who moves pursuant to a military order and incident to 
                a permanent change of station.
            ``(3) Joint returns.--In the case of a credit allowed under 
        subsection (a) with respect to a joint return, half of such 
        credit shall be treated as having been allowed to each 
        individual filing such return for purposes of this subsection.
            ``(4) Return requirement.--If the tax imposed by this 
        chapter for the taxable year is increased under this 
        subsection, the taxpayer shall, notwithstanding section 6012, 
        be required to file a return with respect to the taxes imposed 
        under this subtitle.''.
    (c) Modification of Credit Amount.--
            (1) In general.--Subparagraph (A) of section 36(b)(1) of 
        the Internal Revenue Code of 1986 is amended by striking 
        ``$8,000'' and inserting ``the amount that is 3.5 percent of 
        the dollar amount limitation determined under section 305(a)(2) 
        of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 
        1454(a)(2)), including any increase in the limitation for an 
        area determined to be a high-cost area under such section, with 
        respect to the purchase of the qualified principal residence''.
            (2) Conforming amendments.--Paragraph (1) of section 36(b) 
        of such Code is amended--
                    (A) by striking ``$4,000'' in subparagraph (B) and 
                inserting ``1.75 percent'',
                    (B) by striking ``$8,000'' in subparagraph (B) and 
                inserting ``3.5 percent'', and
                    (C) by striking ``$8,000'' in subparagraph (C) and 
                inserting ``the amount described in subparagraph (A)''.
    (d) Modification of Income Limitation.--Subclause (II) of section 
36(b)(2)(A)(i) of the Internal Revenue Code of 1986 is amended by 
striking ``$75,000 ($150,000 in the case of a joint return)'' and 
inserting ``$125,000 ($250,000 in the case of a joint return)''.
    (e) Availability of Credit for Transfer.--Section 36 of the 
Internal Revenue Code of 1986 is amended by redesignating subsections 
(g) and (h), as amended by this section, as subsections (h) and (i), 
respectively, and by inserting after subsection (f) the following new 
subsection:
    ``(g) Transfer of Credit.--
            ``(1) In general.--A taxpayer may transfer all or a portion 
        of the credit allowable under subsection (a) to 1 or more 
        persons as payment of any liability of the taxpayer arising out 
        of--
                    ``(A) the downpayment of any portion of the 
                purchase price of the principal residence,
                    ``(B) mortgage, flood, and hazard insurance 
                premiums in connection with the purchase and paid at or 
                before closing,
                    ``(C) interest on any debt incurred to purchase the 
                residence,
                    ``(D) State and local real property taxes paid in 
                connection with the purchase, and
                    ``(E) funding fees paid to the Department of 
                Veterans Affairs in connection with the purchase.
            ``(2) Credit transfer mechanism.--
                    ``(A) In general.--Not less than 60 days after the 
                date of the enactment of this subsection, the Secretary 
                shall establish and implement a credit transfer 
                mechanism for purposes of paragraph (1). Such mechanism 
                shall require the Secretary to--
                            ``(i) certify that the taxpayer is eligible 
                        to receive the credit provided by this section 
                        with respect to the purchase of a principal 
                        residence and that the transferee is eligible 
                        to receive the credit transfer,
                            ``(ii) certify the credit transfer amount 
                        which will be paid to the transferee, and
                            ``(iii) require any transferee that 
                        directly receives the credit transfer amount 
                        from the Secretary to notify the taxpayer 
                        within 14 days of the receipt of such amount.
                Any check, certificate, or voucher issued by the 
                Secretary pursuant to this paragraph shall include the 
                taxpayer identification number of the taxpayer and the 
                address of the principal residence being purchased. For 
                purposes of determining the credit transfer amount 
                under clause (ii), the Secretary may estimate the 
                taxpayer's modified adjusted gross income for the 
                taxable year (as described in subsection (b)(2)) based 
                on the taxpayer's modified adjusted gross income (as so 
                described) for the preceding taxable year.
                    ``(B) Timely receipt.--The Secretary shall issue 
                the credit transfer amount not less than 30 days after 
                the date of the receipt of an application for a credit 
                transfer.
            ``(3) Payment of interest.--
                    ``(A) In general.--Notwithstanding any other 
                provision of this title, the Secretary shall pay 
                interest on any amount which is not paid to a person 
                during the 30-day period described in paragraph (2)(B).
                    ``(B) Amount of interest.--Interest under 
                subparagraph (A) shall be allowed and paid--
                            ``(i) from the day after the 30-day period 
                        described in paragraph (2)(B) to the date 
                        payment is made, and
                            ``(ii) at the overpayment rate established 
                        under section 6621.
                    ``(C) Exception.--This paragraph shall not apply to 
                failures to make payments as a result of any natural 
                disaster or other circumstance beyond the control of 
                the Secretary.
            ``(4) Recapture of transfer amount.--If the credit transfer 
        amount paid to the transferee exceeds the amount of the credit 
        allowable under subsection (a) to the taxpayer, the taxpayer's 
        tax imposed by this chapter for the taxable year shall be 
        increased by the amount of such excess.
            ``(5) Effect on legal rights and obligations.--Nothing in 
        this subsection shall be construed to--
                    ``(A) require a lender to complete a loan 
                transaction before the credit transfer amount has been 
                transferred to the lender, or
                    ``(B) prevent a lender from altering the terms of a 
                loan (including the rate, points, fees, and other 
                costs) due to changes in market conditions or other 
                factors during the period of time between the 
                application by the taxpayer for a credit transfer and 
                the receipt by the lender of the credit transfer 
                amount.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to residences purchased on or after December 31, 2008, in taxable 
years ending on or after such date.

Summary: Amends the Internal Revenue Code to revise the tax credit for first-time homebuyers by: (1) eliminating the first-time homebuyer requirement (thus making such credit available to all homebuyers); (2) eliminating the repayment requirement for such credit except for resales of a principal residence, or failure to occupy such residence, at any time within 36 months of purchase; (3) exempting from the repayment requirement members of the Armed Forces who are ordered to relocate; (4) modifying the maximum amount of such credit and the adjusted gross income thresholds for reductions in the credit amount; and (5) allowing taxpayers to transfer their anticipated credit amount to another individual for specified purposes, including making a downpayment on a portion of a purchase price of a principal residence.