To amend the Internal Revenue Code of 1986 to restore a partial deduction for personal interest and thereby to encourage economic recovery and to avoid the need to borrow against home equity.

September 25, 2001

Ms. WATERS (for herself, Ms. ESHOO, Mr. SAWYER, Mr. HOYER, Mr. FORD, Mr. MCGOVERN, Ms. LOFGREN, Mr. MOORE, Mr. MARKEY, Ms. PELOSI, Mr. MORAN of Virginia, Mr. LANGEVIN, Mr. DEFAZIO, Mr. TURNER, Mr. KUCINICH, Mr. HOLT, Mrs. MALONEY of New York, Mr. REYES, Mr. PASTOR, Mr. HINOJOSA, Mrs. NAPOLITANO, Mr. LAMPSON, Mr. GONZALEZ, Mr. CLEMENT, Mr. RODRIGUEZ, Mr. CLAY, Ms. CARSON of Indiana, Mr. DAVIS of Illinois, Mr. FATTAH, Mr. BALDACCI, Mr. HOLDEN, Mr. CUMMINGS, Mr. DELAHUNT, Mr. SANDLIN, Mr. FARR of California, Mr. MATSUI, Mr. CLYBURN, Mr. THOMPSON of Mississippi, Mr. JACKSON of Illinois, Mr. WATT of North Carolina, Mr. WYNN, Ms. WOOLSEY, Mrs. MEEK of Florida, Mr. PAYNE, Ms. BROWN of Florida, Mr. OWENS, Ms. JACKSON-LEE of Texas, and Mrs. CLAYTON) introduced the following bill; which was referred to the Committee on Ways and Means

To amend the Internal Revenue Code of 1986 to restore a partial deduction for personal interest and thereby to encourage economic recovery and to avoid the need to borrow against home equity.

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 `Home Equity Loss Prevention and Economic Recovery Act of 2001'.

SEC. 2. RESTORATION OF PARTIAL DEDUCTION FOR PERSONAL INTEREST.

(a) Restoration of $10,000 Deduction-

(1) IN GENERAL- Paragraph (1) of section 163(h) of the Internal Revenue Code of 1986 is amended by inserting before the period `to the extent such interest exceeds $10,000'.

(2) INFLATION ADJUSTMENT- Paragraph (5) of section 163(h) of such Code is amended to read as follows:

`(5) INFLATION ADJUSTMENT OF $10,000 EXCEPTION- In the case of any taxable year beginning in a calendar year after 2002, the $10,000 amount contained in paragraph (1) shall be increased by an amount equal to--

`(A) $10,000, multiplied by

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

Any increase determined under the preceding sentence shall be rounded to the nearest multiple of $50.'

(b) REPEAL OF RESTRICTIONS ON DEDUCTION FOR EDUCATION LOANS-

(1) IN GENERAL- Subsection (b) of section 221 of such Code (relating to relating to interest on education loans) is amended by striking subsection (b) (relating to relating to maximum deduction).

(2) CONFORMING AMENDMENTS-

(A) Paragraph (1) of section 221(e) of such Code is amended to read as follows:

`(1) DENIAL OF DOUBLE BENEFIT- No deduction shall be allowed under any other provision of this chapter for any amount for which a deduction is allowed under this section.'

(B) Subsection (f) of section 221 of such Code is hereby repealed.

(c) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years ending after the date of the enactment of this Act.

END