To amend the Internal Revenue Code of 1986 to provide an inflation adjustment of the dollar limitation on the exclusion of gain on the sale of a principal residence.

February 11, 2003

Mr. ANDREWS introduced the following bill; which was referred to the Committee on Ways and Means

To amend the Internal Revenue Code of 1986 to provide an inflation adjustment of the dollar limitation on the exclusion of gain on the sale of a principal residence.

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 `Homeowners' Benefit Protection Act of 2003'.

SEC. 2. INFLATION ADJUSTMENT OF LIMITATION ON EXCLUSION OF GAIN ON SALE OF PRINCIPAL RESIDENCE.

(a) IN GENERAL- Subsection (b) of section 121 of the Internal Revenue Code of 1986 (relating to exclusion of gain from sale of principal residence) is amended by adding at the end the following new paragraph:

`(4) EXCLUSION LIMITATION-

`(A) IN GENERAL- For purposes of this subsection, the exclusion limitation is $250,000.

`(B) INFLATION ADJUSTMENT- In the case of any sale or exchange during any calendar year after 2002, the dollar amount contained in subparagraph (A) shall be increased by an amount equal to--

`(i) such dollar amount, multiplied by

`(ii) the cost-of-living adjustment determined under section 1(f)(3) for such calendar year by substituting `calendar year 2001' for `calendar year 1992' in subparagraph (B) thereof.

If any increase under the preceding sentence is not a multiple of $1,000, such increase shall be rounded to the nearest multiple of $1,000.'

(b) CONFORMING AMENDMENTS-

(1) Paragraph (1) of section 121(b) of such Code is amended by striking `$250,000' and inserting `the exclusion limitation'.

(2) Paragraph (2) of section 121(b) of such Code is amended by striking so much of such paragraph as precedes subparagraph (A) and inserting the following:

`(2) LIMITATION FOR JOINT RETURNS- Paragraph (1) shall be applied by substituting `twice the exclusion limitation' for `the exclusion limitation' if--'.

(c) EFFECTIVE DATE- The amendments made by this section shall apply to sales and exchanges after December 31, 2002.

END