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SECTION 1. SHORT TITLE.

This Act may be cited as the ''Boosting Equity for the American
Middle Class Act of 2016'' or as the ''BEAM Act of 2016''.

SEC. 2. REFUNDABLE CREDIT FOR EARLY PRINCIPAL PAYMENTS ON CERTAIN HOME
MORTGAGES.

(a) In General.--Subpart C of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 is amended by inserting after
section 36B the following new section:

''SEC. 36C. EARLY PRINCIPAL PAYMENTS ON CERTAIN HOME MORTGAGES.

''(a) In General.--In the case of an individual, there shall be
allowed as a credit against the tax imposed by this subtitle for the
taxable year an amount equal to 50 percent of the excess home mortgage
principal payments made by the taxpayer during such taxable year.
''(b) Annual Dollar Limitation.--The credit allowed under
subsection (a) with respect to any taxpayer for any taxable year shall
not exceed $500.
''(c) Lifetime Limitation.--No credit shall be allowed under
subsection (a) to any taxpayer for any taxable year if credit was
allowed under subsection (a) to such taxpayer for any 10 preceding
taxable years.
''(d) Limitation Based on Modified Adjusted Gross Income.--
''(1) In general.--The amount which would (but for this
paragraph and after the application of subsection (b)) be
allowable as a credit under subsection (a) shall be reduced
(but not below zero) by the amount which bears the same ratio
to the amount which would be so allowable as--
''(A) the excess of--
''(i) the taxpayer's modified adjusted
gross income for the taxable year, over
''(ii) $125,000 (twice such amount in the
case of a joint return), bears to
''(B) $10,000 (twice such amount in the case of a
joint return).
''(2) Modified adjusted gross income.--The term 'modified
adjusted gross income' means adjusted gross income increased by
any amount excluded from gross income under section 911, 931,
or 933.
''(e) Excess Home Mortgage Principal Payments.--For purposes of
this subsection--
''(1) In general.--The term 'excess home mortgage principal
payments' means, with respect to qualified home mortgage
indebtedness for any taxable year, the excess of--
''(A) the aggregate amount of principal paid by the
taxpayer with respect to such indebtedness during such
taxable year, over
''(B) the aggregate amount of principal which would
have been paid by the taxpayer with respect to such
indebtedness during such taxable year if the taxpayer
had timely made each required payment under the terms
of the indebtedness during such taxable year (and no
other payments).
''(2) Qualified home mortgage indebtedness.--
''(A) In general.--The term 'qualified home
mortgage indebtedness' means any acquisition
indebtedness (as defined in section 163(h)(3)(B)) if--
''(i) the residence with respect to such
acquisition indebtedness is the primary
residence (within the meaning of section 121)
of the taxpayer, and
''(ii) such indebtedness constitutes a
traditional mortgage.
''(B) Traditional mortgage.--For purposes of this
paragraph, the term 'traditional mortgage' means
indebtedness--
''(i) the term of which is not less than 15
years and not more than 30 years, and
''(ii) the required payments under which
are each the same amount and made in equal
intervals during the term of the indebtedness
(or if any payment is required at a different
interval, the amount of such payment is
adjusted in the same proportion as the change
in interval).
''(f) Rules Related to Joint Returns.--
''(1) No credit for married individuals filing
separately.--In the case of a married individual, no credit
shall be allowed under this section for any taxable year unless
such individual files a joint return with such individual's
spouse for such taxable year.
''(2) Application of lifetime limitation with respect to
joint returns.--If the credit under subsection (a) is allowed
with respect to a joint return for any taxable year, such
credit shall be treated for purposes of applying subsection (c)
as allowed to both spouses for such taxable year. For purposes
of applying subsection (c) with respect to a joint return for
any taxable year, the taxpayer shall be treated as having been
allowed the credit under subsection (a) for 10 or more
preceding taxable years only if both spouses have been so
allowed such credits.''.
(b) Reporting of Excess Home Mortgage Principal Payments.--Section
6050H(b)(2) of such Code is amended by striking ''and'' at the end of
subparagraph (C), by redesignating subparagraph (D) as subparagraph
(E), and by inserting after subparagraph (C) the following new
subparagraph:
''(D) the amount of excess home mortgage principal
payments (as defined in section 36C(e)) received with
respect to such mortgage during the calendar year,
and''.
(c) Conforming Amendments.--
(1) Section 6211(b)(4)(A) of such Code is amended by
inserting ''36C,'' after ''36B,''.
(2) Section 1324(b)(2) of title 31, United States Code, is
amended by inserting ''36C,'' after ''36B,''.
(3) 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 by inserting after the item relating to section 36B
the following new item:

''Sec. 36C. Early principal payments on certain home mortgages.''.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years ending after the date of the enactment of this
Act.
Boosting Equity for the American Middle Class Act of 2016 or the BEAM Act of 2016 This bill amends the Internal Revenue Code to allow a refundable tax credit equal to 50% of the excess home mortgage principal payments made by a taxpayer during the year. The credit is limited to $500 per year and to taxpayers who have not received the credit for any of the 10 preceding years. The bill reduces the amount of the credit for taxpayers with modified adjusted gross incomes above specified levels. An "excess home mortgage principal payment" is the excess of: (1) the amount of principal paid by the taxpayer with respect to a mortgage during the year, over (2) the amount of principal the taxpayer would have paid by making each required payment on a timely basis under the terms of the mortgage (and no other payments). The mortgage must: (1) be for a primary residence, (2) for a term between 15 and 30 years, and (3) require payments that are each the same amount and made in equal intervals during the term of the mortgage (or if any payment is required at a different interval, the amount of the payment is adjusted in the same proportion as the change in interval). Married individuals must file a joint tax return to claim the credit. Persons engaged in a trade or business (e.g., lenders, mortgage companies, or banks) who are required to report mortgage interest payments from individuals of $600 or more must also report the amount of excess home mortgage principal payments received during the year.