Title: First-Time Homebuyer Credit Act of 2018
Policy area: Taxation

Summary:
First-Time Homebuyer Credit Act of 2018
This bill amends the Internal Revenue Code to extend and modify the first-time homebuyer tax credit, which expired in 2010.
The bill allows a refundable tax credit for first-time homebuyers of a principal residence in the United States who are at least 18 years of age and not claimed as a dependent by another taxpayer. The credit is equal to 2.5% of the purchase price of the residence, subject to a $10,000 limitation and limits based on the purchase price of the home and the adjusted gross income of the taxpayer.
A taxpayer that purchases and disposes of a residence in the same taxable year is not eligible for the credit. Taxpayers that dispose of the residence within five years of claiming the credit are liable for additional taxes based on a specified recapture percentage of the amount of the credit that was allowed. The bill includes several exceptions for a disposal that occurs after circumstances such as a death, divorce, involuntary conversion of the residence, relocation of a military duty station, or changes in employment or health status.

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[S. 3364 Introduced in Senate (IS)]

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115th CONGRESS
  2d Session
                                S. 3364

   To amend the Internal Revenue Code of 1986 to create a refundable 
                    first-time homebuyer tax credit.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            August 22, 2018

   Mr. Wyden introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
   To amend the Internal Revenue Code of 1986 to create a refundable 
                    first-time homebuyer tax credit.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``First-Time Homebuyer Credit Act of 
2018''.

SEC. 2. FIRST-TIME HOMEBUYER REFUNDABLE CREDIT.

    (a) In General.--Section 36 of the Internal Revenue Code of 1986 is 
amended to read as follows:

``SEC. 36. FIRST-TIME HOMEBUYER REFUNDABLE CREDIT.

    ``(a) Allowance of Credit.--In the case of an individual who is a 
first-time homebuyer of a principal residence in the United States 
during a taxable year, there shall be allowed as a credit against the 
tax imposed by this subtitle for such taxable year an amount equal to 
2.5 percent of the purchase price of the residence.
    ``(b) Limitations; Special Rules Based on Marital and Filing 
Status.--
            ``(1) Dollar limitation.--The credit allowed under 
        subsection (a) shall not exceed $10,000.
            ``(2) Limitation based on purchase price.--The amount 
        allowable as a credit under subsection (a) (determined without 
        regard to this paragraph and paragraph (3), and after the 
        application of paragraph (1)) 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--
                    ``(A) the excess (if any) of--
                            ``(i) the purchase price of the residence, 
                        over
                            ``(ii) $600,000, bears to
                    ``(B) $100,000.
            ``(3) 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 and after the application of paragraphs (1) 
                and (2)) 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) $80,000 ($160,000 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.
            ``(4) Age limitation.--No credit shall be allowed under 
        subsection (a) with respect to the purchase of any residence 
        for a taxable year if--
                    ``(A) the taxpayer has not attained age 18 as of 
                the date of such purchase, or
                    ``(B) a deduction under section 151 with respect to 
                the taxpayer is allowable to another taxpayer for the 
                taxable year.
        In the case of a taxpayer who is married, the taxpayer shall be 
        treated as meeting the age requirement of subparagraph (A) if 
        the taxpayer or the taxpayer's spouse meets such age 
        requirement.
            ``(5) Multiple purchasers.--If two or more individuals who 
        are not married purchase a principal residence, the amount of 
        the credit under subsection (a) shall be allocated among such 
        individuals in such manner as the Secretary may prescribe by 
        taking into account the requirements of paragraphs (2) and (3), 
        except that the total amount of the credits allowed to all such 
        individuals shall not exceed $10,000.
            ``(6) Married couples must file joint return.--If an 
        individual is married at the close of the taxable year, the 
        credit shall be allowed under subsection (a) only if the 
        individual and the individual's spouse file a joint return for 
        the taxable year.
    ``(c) Definitions.--For purposes of this section--
            ``(1) First-time homebuyer.--
                    ``(A) In general.--The term `first-time homebuyer' 
                means any individual who acquires a principal residence 
                by purchase if such individual (and, if married, such 
                individual's spouse)--
                            ``(i) has not claimed any credit or 
                        deduction under this title for any previous 
                        taxable year with respect to the purchase or 
                        ownership of any residence or residential real 
                        estate (including for any expenditures relating 
                        to the placing in service of any property on, 
                        in connection with, or for use in such a 
                        residence or real estate), and
                            ``(ii) attests under penalty of perjury 
                        that--
                                    ``(I) the individual (and, if 
                                married, the individual's spouse) has 
                                not owned a principal residence at any 
                                time prior to the purchase of the 
                                principal residence to which this 
                                section applies, and
                                    ``(II) the principal residence to 
                                which this section applies was not 
                                acquired from a person related to such 
                                individual or spouse.
                    ``(B) Waiver in case of certain changes in 
                status.--The Secretary may, in such manner as the 
                Secretary may prescribe, waive the requirements of 
                subparagraph (A) for a taxable year in the case of an 
                individual who is not eligible to file a joint return 
                for the taxable year, and who was married at the time 
                the individual or the individual's former spouse 
                purchased a previous residence.
            ``(2) Principal residence.--The term `principal residence' 
        has the same meaning as when used in section 121.
            ``(3) Purchase.--
                    ``(A) In general.--The term `purchase' means any 
                acquisition, but only if--
                            ``(i) the property is not acquired from a 
                        person related to the person acquiring such 
                        property (or, if either such person is married, 
                        such individual's spouse), and
                            ``(ii) the basis of the property in the 
                        hands of the person acquiring such property is 
                        not determined--
                                    ``(I) in whole or in part by 
                                reference to the adjusted basis of such 
                                property in the hands of the person 
                                from whom acquired, or
                                    ``(II) under section 1014(a).
                    ``(B) Construction.--A residence which is 
                constructed by the taxpayer shall be treated as 
                purchased by the taxpayer on the date the taxpayer 
                first occupies such residence.
            ``(4) Purchase price.--The term `purchase price' means the 
        adjusted basis (without regard to any reduction under section 
        1016(a)(38)) of the principal residence on the date such 
        residence is purchased.
            ``(5) Related persons.--A person shall be treated as 
        related to another person if the relationship between such 
        persons would result in the disallowance of losses under 
        section 267 or 707(b) (but, in applying subsections (b) and (c) 
        of section 267 for purposes of this section, paragraph (4) of 
        section 267(c) shall be treated as providing that the family of 
        an individual shall include only the individual's spouse, 
        ancestors, lineal descendants, and spouse's ancestors and 
        lineal descendants).
            ``(6) Marital status.--An individual's marital status shall 
        be determined in accordance with section 7703.
    ``(d) Denial and Recapture Rules in Case of Disposal of Residence 
Within 5 Taxable Years.--
            ``(1) Denial of credit in case of disposal within taxable 
        year.--No credit under subsection (a) shall be allowed to any 
        taxpayer for any taxable year with respect to the purchase of a 
        residence if the taxpayer disposes of such residence (or such 
        residence ceases to be the principal residence of the taxpayer 
        (and, if married, the taxpayer's spouse)) before the close of 
        such taxable year.
            ``(2) Partial recapture.--
                    ``(A) In general.--Except as provided in 
                subparagraph (D), if the taxpayer disposes of the 
                residence with respect to which a credit was allowed 
                under subsection (a) (or such residence ceases to be 
                the principal residence of the taxpayer (and, if 
                married, the taxpayer's spouse)) during the 4-taxable-
                year period beginning with the taxable year immediately 
                following the credit year, the tax imposed by this 
                chapter for the taxable year in which such disposal (or 
                cessation) occurs shall be increased by an amount equal 
                to the recapture percentage of the amount of the credit 
                so allowed.
                    ``(B) Credit year.--For purposes of subparagraph 
                (A), the term `credit year' means the taxable year in 
                which the credit under subsection (a) was allowed.
                    ``(C) Recapture percentage.--For purposes of 
                subparagraph (A), the recapture percentage with respect 
                to any disposal or cessation described in such 
                subparagraph shall be determined in accordance with the 
                following table:

``If the disposal or cessation                            The recapture
  occurs in:                                             percentage is:
        The 1st taxable year beginning after the credit     80 percent 
            year.
        The 2nd taxable year beginning after the credit     60 percent 
            year.
        The 3rd taxable year beginning after the credit     40 percent 
            year.
        The 4th taxable year beginning after the credit     20 percent.
            year.

                    ``(D) Exceptions.--This paragraph shall not apply 
                in the case of a disposal or cessation described in 
                subparagraph (A) which occurs after or incident to any 
                of the following:
                            ``(i) Death of the taxpayer or the 
                        taxpayer's spouse.
                            ``(ii) Divorce of the taxpayer.
                            ``(iii) Involuntary conversion of the 
                        residence (within the meaning of section 
                        121(d)(5)(A)).
                            ``(iv) Relocation of duty station or 
                        qualified official extended duty (as defined in 
                        section 121(d)(9)(C)) of the taxpayer or the 
                        taxpayer's spouse who is a member of the 
                        uniformed services (as defined in section 
                        121(d)(9)(C)(ii)), a member of the Foreign 
                        Service of the United States (as defined in 
                        section 121(d)(9)(C)(iii)), or an employee of 
                        the intelligence community (as defined in 
                        section 121(d)(9)(C)(iv)).
                            ``(v) Change of employment of the taxpayer 
                        or the taxpayer's spouse which meets the 
                        conditions of section 217(c).
                            ``(vi) Loss of employment, health 
                        conditions, or such other unforeseen 
                        circumstances as may be specified by the 
                        Secretary.
    ``(e) Adjustment to Basis.--For purposes of this subtitle, if a 
credit is allowed under this section with respect to any property, the 
taxpayer's basis in such property shall be reduced by the amount of the 
credit so allowed.
    ``(f) Reporting.--
            ``(1) In general.--A credit shall be allowed under this 
        section only if the following are included on the return of 
        tax:
                    ``(A) The individual's (and, if married, the 
                individual's spouse's) social security number issued by 
                the Social Security Administration.
                    ``(B) The street address (not including a post 
                office box) of the principal residence purchased.
                    ``(C) The purchase price of the principal 
                residence.
                    ``(D) The date of purchase of the principal 
                residence.
                    ``(E) The closing disclosure relating to the 
                purchase (in the case of a purchase financed by a 
                mortgage).
            ``(2) Reporting of real estate transactions.--If the 
        Secretary requires information reporting under section 6045 by 
        a person described in subsection (e)(2) thereof to verify the 
        eligibility of taxpayers for the credit allowable by this 
        section, the exception provided by section 6045(e)(5) shall not 
        apply.''.
    (b) Conforming Amendment Relating to Basis Adjustment.--Subsection 
(a) of section 1016 of the Internal Revenue Code of 1986 is amended--
            (1) by striking ``and'' at the end of paragraph (36),
            (2) by striking the period at the end of paragraph (37) and 
        inserting ``, and'', and
            (3) by adding at the end the following new paragraph:
            ``(38) to the extent provided in section 36(e).''.
    (c) Conforming Amendment.--Section 26(b)(2) of the Internal Revenue 
Code of 1986 is amended by striking subparagraph (W) and by 
redesignating subparagraphs (X) and (Y) as subparagraphs (W) and (X), 
respectively.
    (d) Clerical Amendment.--The item relating to section 36 in the 
table of sections for subpart C of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended to read as follows:

``Sec. 36. First-time homebuyer refundable credit.''.
    (e) Authority To Treat Claim of Credit as Error, etc.--Subparagraph 
(N) of section 6213(g)(2) of the Internal Revenue Code of 1986 is 
amended to read as follows:
                    ``(N) in the case of a return claiming the credit 
                under section 36--
                            ``(i) the omission of a social security 
                        number required under section 36(f)(1)(A),
                            ``(ii) the inclusion of a social security 
                        number so required if--
                                    ``(I) the claim of the credit on 
                                the return reflects the treatment of 
                                such individual as being of an age 
                                different from the individual's age 
                                based on such social security number, 
                                or
                                    ``(II) except as provided in 
                                section 36(c)(1)(B), such social 
                                security number has been included 
                                (other than as a dependent for purposes 
                                of section 151) on a return for any 
                                previous taxable year claiming any 
                                credit or deduction described in 
                                section 36(c)(1)(A)(i),
                            ``(iii) the omission of any other required 
                        information or documentation described in 
                        section 36(f)(1), including the inclusion of a 
                        post office box instead of a street address for 
                        the purchased residence,
                            ``(iv) the inclusion of any information or 
                        documentation described in clause (iii) if such 
                        information or documentation does not support a 
                        valid claim for the credit, or
                            ``(v) a claim of such credit for a taxable 
                        year with respect to the purchase of a 
                        residence made after the last day of such 
                        taxable year, or''.
    (f) IRS Recordkeeping.--Notwithstanding the limitations on 
assessment and collection under section 6501 of the Internal Revenue 
Code of 1986, the Commissioner of Internal Revenue shall maintain in 
perpetuity records of returns and return information (as defined in 
section 6103(b)(2) of such Code) of any taxpayer claiming the credit 
under section 36 of such Code (as amended by this section) for the 
taxable year in which such credit is claimed and succeeding taxable 
years. The Commissioner may, in the Commissioner's discretion, discard 
such records within a reasonable amount of time after the death of such 
taxpayer (and, if married, the taxpayer's spouse).
    (g) Effective Date.--The amendments made by this section shall 
apply to residences purchased in taxable years beginning after December 
31, 2018.
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