To amend the Internal Revenue Code of 1986 to allow a credit against income tax for the purchase of a principal residence by a first-time homebuyer.

May 9, 2001

Mr. ENGLISH (for himself and Mrs. THURMAN) introduced the following bill; which was referred to the Committee on Ways and Means

To amend the Internal Revenue Code of 1986 to allow a credit against income tax for the purchase of a principal residence by a first-time homebuyer.

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

SECTION 1. CREDIT FOR FIRST-TIME HOMEBUYERS.

(a) IN GENERAL- 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 25A the following new section:

`SEC. 25B. PURCHASE OF PRINCIPAL RESIDENCE BY FIRST-TIME HOMEBUYER.

`(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 any taxable year, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to 10 percent of the purchase price of the residence.

`(b) LIMITATIONS-

`(1) MAXIMUM CREDIT- The credit allowed under subsection (a) shall not exceed $6,500.

`(2) LIMITATION TO ONE RESIDENCE- The credit under this section shall be allowed with respect to only one residence of the taxpayer.

`(3) MARRIED INDIVIDUALS FILING JOINTLY- In the case of a husband and wife who file a joint return, the credit under this section is allowable only if both the husband and wife are first-time homebuyers, and the amount specified under paragraph (1) shall apply to the joint return.

`(4) MARRIED INDIVIDUALS FILING SEPARATELY- In the case of a married individual filing a separate return, the credit under this section is allowable only if the individual is a first-time homebuyer, and subsection (a) shall be applied by substituting `$3,250' for `$6,500'.

`(5) OTHER TAXPAYERS- If 2 or more individuals who are not married purchase a 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 $6,500.

`(c) DEFINITIONS- For purposes of this section--

`(1) FIRST-TIME HOMEBUYER-

`(A) IN GENERAL- The term `first-time homebuyer' means any individual is such individual (and if married, such individual's spouse) had no present ownership interest in a principal residence in the United States during the 3-year period ending on the date of the purchase of the principal residence to which this section applies.

`(B) ONE-TIME ONLY- If an individual is treated as a first-time homebuyer with respect to any principal residence, such individual may not be treated as a first-time homebuyer with respect to any other principal residence.

`(2) PRINCIPAL RESIDENCE- The term `principal residence' has the same meaning as when used in section 121.

`(3) PURCHASE AND PURCHASE PRICE- The terms `purchase' and `purchase price' have the meanings provided by section 1400C(e).

`(d) CARRYFORWARD OF UNUSED CREDIT- If the credit allowable under subsection (a) for any taxable year exceeds the limitation imposed by section 26(a) for such taxable year reduced by the sum of the credits allowable under this subpart (other than this section), such excess shall be carried to the succeeding taxable year and added to the credit allowable under subsection (a) for such taxable year.

`(e) REPORTING- 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.

`(f) DENIAL OF DOUBLE BENEFIT- No credit shall be allowed under subsection (a) if the credit under section 1400C is allowed.

`(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.

`(h) PROPERTY TO WHICH SECTION APPLIES- The provisions of this section apply to a principal residence if the taxpayer enters into, on or after June 1, 2001, and before June 1, 2002, a binding contract to purchase the residence, and purchases and occupies the residence before January 1, 2003.'.

(b) CONFORMING AMENDMENTS-

(1) Subsection (a) of section 1016 of such Code (relating to general rule for adjustments to basis) is amended by striking `and' at the end of paragraph (26), by striking the period at the end of paragraph (27) and inserting `, and', and by adding at the end thereof the following new paragraph:

`(28) in the case of a residence with respect to which a credit was allowed under section 25B, to the extent provided in section 25B(g).'.

(2) Subsection (c) of section 23 of such Code is amended by striking `section 1400C' and inserting `sections 25B and 1400C'.

(3) Subparagraph (C) of section 25(e)(1) of such Code is amended by striking `sections 23 and' and inserting `sections 23, 25B, and 1400C'.

(4) Subsection (d) of section 1400C of such Code is amended by inserting `and section 25B' after `other than this section'.

(c) CLERICAL AMENDMENT- The table of sections for subpart A of part IV of subchapter A of chapter 1 of such Code is amended by inserting after the item relating to section 25A the following new item:

`Sec. 25B. Purchase of principal residence by first-time homebuyer.'.

(d) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after December 31, 2000.

END