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.

SA 4421. Mr. CARDIN (for himself and Mr. Ensign) proposed an
amendment to amendment SA 4387 submitted by Mr. Dodd (for himself and
Mr. Shelby) to the bill H.R. 3221, moving the United States toward
greater energy independence and security, developing innovative new
technologies, reducing carbon emissions, creating green jobs,
protecting consumers, increasing clean renewable energy production, and
modernizing our energy infrastructure, and to amend the Internal
Revenue Code of 1986 to provide tax incentives for the production of
renewable energy and energy conservation; which was ordered to lie on
the table; as follows:

At the end, insert the following:

TITLE--FIRST-TIME HOMEBUYERS' TAX CREDIT

SEC. _01. 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 25D the following new section:

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

``(a) Allowance of Credit.--
``(1) In general.--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 subtitle for the
taxable year an amount equal to so much of the purchase price
of the residence as does not exceed $7,000.
``(2) Allocation of credit amount.--The amount of the
credit allowed under paragraph (1) shall be equally divided
among the 2 taxable years beginning with the taxable year in
which the purchase of the principal residence is made.
``(b) Limitations.--
``(1) Limitation based on modified adjusted gross income.--
``(A) In general.--The amount allowable as a credit under
subsection (a) (determined without regard to this subsection)
for the taxable year shall be reduced (but not below zero) by
the amount which bears the same ratio to the credit so
allowable as--
``(i) the excess (if any) of--

``(I) the taxpayer's modified adjusted gross income for
such taxable year, over
``(II) $70,000 ($110,000 in the case of a joint return),
bears to

``(ii) $20,000.
``(B) Modified adjusted gross income.--For purposes of
paragraph (1), 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.
``(2) Limitation based on amount of tax.--In the case of a
taxable year to which section 26(a)(2) does not apply, the
credit allowed under subsection (a) for any taxable year
shall not exceed the excess of--
``(A) the sum of the regular tax liability (as defined in
section 26(b)) plus the tax imposed by section 55, over
``(B) the sum of the credits allowable under this subpart
(other than this section and section 23) for the taxable
year.
``(c) Definitions and Special Rules.--For purposes of this
section--
``(1) First-time homebuyer.--
``(A) In general.--The term `first-time homebuyer' has the
same meaning as when used in section 72(t)(8)(D)(i).
``(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.
``(C) Married individuals filing jointly.--In the case of
married individuals who file a joint return, the credit under
this section is allowable only if both individuals are first-
time homebuyers.
``(D) Other taxpayers.--If 2 or more individuals who are
not married purchase a principal residence--
``(i) the credit under this section is allowable only if
each of the individuals is a first-time homebuyer, and
``(ii) the amount of the credit allowed under subsection
(a) shall be allocated among such individuals in such manner
as the Secretary may prescribe.
``(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 whose
relationship to the person acquiring it would result in the
disallowance of losses under section 267 or 707(b) (but, in
applying section 267 (b) and (c) 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, and lineal descendants),
and
``(ii) the basis of the property in the hands of the person
acquiring it 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) (relating to property acquired
from a decedent).

``(B) Construction.--A residence which is constructed by
the taxpayer shall be treated as purchased by the taxpayer.
``(4) Purchase price.--The term `purchase price' means the
adjusted basis of the principal residence on the date of
acquisition (within the meaning of section 72(t)(8)(D)(iii)).
``(d) Denial of Double Benefit.--No credit shall be allowed
under subsection (a) for any expense for which a deduction or
credit is allowed under any other provision of this chapter.
``(e) Recapture in the Case of Certain Dispositions.--In
the event that a taxpayer--
``(1) disposes of the principal residence with respect to
which a credit is allowed under subsection (a), or
``(2) fails to occupy such residence as the taxpayer's
principal residence,

at any time within 24 months after the date on which the
taxpayer purchased such residence, then the remaining portion
of the credit allowed under subsection (a) shall be
disallowed in the taxable year during which such disposition
occurred or in which the taxpayer failed to occupy the
residence as a principal residence, and in any subsequent
taxable year in which the remaining portion of the credit
would, but for this subsection, have been allowed.
``(f) 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.
``(g) Property To Which Section Applies.--The provisions of
this section shall apply to a principal residence if the
taxpayer's date of acquisition of the residence (within the
meaning of section 72(t)(8)(D)(iii)) and date of settlement
on such residence are during the period beginning on the date
of the enactment of this section and ending on the date that
is 1 year after such date.''.
(b) Conforming Amendments.--
(1) Section 24(b)(3)(B) of the Internal Revenue Code of
1986 is amended by striking ``and 25B'' and inserting ``,
25B, and 25E''.
(2) Section 25(e)(1)(C)(ii) of such Code is amended by
inserting ``25E,'' after ``25D,''.

[[Page S2549]]

(3) Section 25B(g)(2) of such Code is amended by striking
``section 23'' and inserting ``sections 23 and 25E''.
(4) Section 25D(c)(2) of such Code is amended by striking
``and 25B'' and inserting ``25B, and 25E''.
(5) Section 26(a)(1) of such Code is amended by striking
``and 25B'' and inserting ``25B, and 25E''.
(6) Section 904(i) of such Code is amended by striking
``and 25B'' and inserting ``25B, and 25E''.
(7) Subsection (a) of section 1016 of such Code is amended
by striking ``and'' at the end of paragraph (36), by striking
the period at the end of paragraph (37) and inserting ``,
and'', and by adding at the end the following new paragraph:
``(38) to the extent provided in section 25E(f).''.
(8) Section 1400C(d)(2) of such Code is amended by striking
``and 25D'' and inserting ``25D, and 25E''.
(c) Clerical Amendment.--The table of sections for subpart
A 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 25D the following new item:

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