[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[S. 3175 Introduced in Senate (IS)]
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114th CONGRESS
2d Session
S. 3175
To amend the Internal Revenue Code of 1986 to create a refundable
first-time homebuyer tax credit.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
July 13, 2016
Mr. Wyden introduced the following bill; which was read twice and
referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to create a refundable
first-time homebuyer tax credit.
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 ``First-Time Homebuyer Credit Act of
2016''.
SEC. 2. FIRST-TIME HOMEBUYER REFUNDABLE CREDIT.
(a) In General.--Section 36 of the Internal Revenue Code of 1986 is
amended to read as follows:
``SEC. 36. FIRST-TIME HOMEBUYER REFUNDABLE CREDIT.
``(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 a taxable year, there shall be allowed as a credit against the
tax imposed by this subtitle for such taxable year an amount equal to
2.5 percent of the purchase price of the residence.
``(b) Limitations; Special Rules Based on Marital and Filing
Status.--
``(1) Dollar limitation.--The credit allowed under
subsection (a) shall not exceed $10,000.
``(2) Limitation based on purchase price.--The amount
allowable as a credit under subsection (a) (determined without
regard to this paragraph and paragraph (3), and after the
application of paragraph (1)) for the taxable year shall be
reduced (but not below zero) by the amount which bears the same
ratio to the amount which is so allowable as--
``(A) the excess (if any) of--
``(i) the purchase price of the residence,
over
``(ii) $600,000, bears to
``(B) $100,000.
``(3) Limitation based on modified adjusted gross income.--
``(A) In general.--The amount allowable as a credit
under subsection (a) (determined without regard to this
paragraph and after the application of paragraphs (1)
and (2)) for the taxable year shall be reduced (but not
below zero) by the amount which bears the same ratio to
the amount which is so allowable as--
``(i) the excess (if any) of--
``(I) the taxpayer's modified
adjusted gross income for such taxable
year, over
``(II) $80,000 ($160,000 in the
case of a joint return), bears to
``(ii) $20,000.
``(B) Modified adjusted gross income.--For purposes
of subparagraph (A), 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.
``(4) Age limitation.--No credit shall be allowed under
subsection (a) with respect to the purchase of any residence
for a taxable year if--
``(A) the taxpayer has not attained age 18 as of
the date of such purchase, or
``(B) a deduction under section 151 with respect to
the taxpayer is allowable to another taxpayer for the
taxable year.
In the case of a taxpayer who is married, the taxpayer shall be
treated as meeting the age requirement of subparagraph (A) if
the taxpayer or the taxpayer's spouse meets such age
requirement.
``(5) Multiple purchasers.--If two or more individuals who
are not married purchase a principal residence, the amount of
the credit under subsection (a) shall be allocated among such
individuals in such manner as the Secretary may prescribe by
taking into account the requirements of paragraphs (2) and (3),
except that the total amount of the credits allowed to all such
individuals shall not exceed $10,000.
``(6) Married couples must file joint return.--If an
individual is married at the close of the taxable year, the
credit shall be allowed under subsection (a) only if the
individual and the individual's spouse file a joint return for
the taxable year.
``(c) Definitions.--For purposes of this section--
``(1) First-time homebuyer.--
``(A) In general.--The term `first-time homebuyer'
means any individual who acquires a principal residence
by purchase if such individual (and, if married, such
individual's spouse)--
``(i) has not claimed any credit or
deduction under this title for any previous
taxable year with respect to the purchase or
ownership of any residence or residential real
estate (including for any expenditures relating
to the placing in service of any property on,
in connection with, or for use in such a
residence or real estate),
``(ii) attests under penalty of perjury
that the individual (and, if married, the
individual's spouse) has not owned a principal
residence at any time prior to the purchase of
the principal residence to which this section
applies, and
``(iii) includes the individual's (and, if
married, the individual's spouse's) social
security number issued by the Social Security
Administration on the return of tax.
``(B) Waiver in case of certain changes in
status.--The Secretary may, in such manner as the
Secretary may prescribe, waive the requirements of
subparagraph (A) for a taxable year in the case of an
individual who is not eligible to file a joint return
for the taxable year, and who was married at the time
the individual or the individual's former spouse
purchased a previous residence.
``(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 related to the person acquiring such
property (or, if either such person is married,
such individual's spouse), and
``(ii) the basis of the property in the
hands of the person acquiring such property 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).
``(B) Construction.--A residence which is
constructed by the taxpayer shall be treated as
purchased by the taxpayer on the date the taxpayer
first occupies such residence.
``(4) Purchase price.--The term `purchase price' means the
adjusted basis (without regard to any reduction under section
1016(a)(38)) of the principal residence on the date such
residence is purchased. Such purchase price shall be included
on the return of tax.
``(5) Related persons.--A person shall be treated as
related to another person if the relationship between such
persons would result in the disallowance of losses under
section 267 or 707(b) (but, in applying subsections (b) and (c)
of section 267 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).
``(6) Marital status.--An individual's marital status shall
be determined in accordance with section 7703.
``(d) Denial and Recapture Rules in Case of Disposal of Residence
Within 5 Taxable Years.--
``(1) Denial of credit in case of disposal within taxable
year.--No credit under subsection (a) shall be allowed to any
taxpayer for any taxable year with respect to the purchase of a
residence if the taxpayer disposes of such residence (or such
residence ceases to be the principal residence of the taxpayer
(and, if married, the taxpayer's spouse)) before the close of
such taxable year.
``(2) Partial recapture.--
``(A) In general.--Except as provided in
subparagraph (D), if the taxpayer disposes of the
residence with respect to which a credit was allowed
under subsection (a) (or such residence ceases to be
the principal residence of the taxpayer (and, if
married, the taxpayer's spouse)) during the 4-taxable-
year period beginning with the taxable year immediately
following the credit year, the tax imposed by this
chapter for the taxable year in which such disposal (or
cessation) occurs shall be increased by an amount equal
to the recapture percentage of the amount of the credit
so allowed.
``(B) Credit year.--For purposes of subparagraph
(A), the term `credit year' means the taxable year in
which the credit under subsection (a) was allowed.
``(C) Recapture percentage.--For purposes of
subparagraph (A), the recapture percentage with respect
to any disposal or cessation described in such
subparagraph shall be determined in accordance with the
following table:
``If the disposal or The recapture
cessation occurs in: percentage is:
the 1st taxable year beginning after the 80 percent
credit year.
the 2nd taxable year beginning after the 60 percent
credit year.
the 3rd taxable year beginning after the 40 percent
credit year.
the 4th taxable year beginning after the 20 percent.
credit year.
``(D) Exceptions.--This paragraph shall not apply
in the case of a disposal or cessation described in
subparagraph (A) which occurs after or incident to any
of the following:
``(i) Death of the taxpayer or the
taxpayer's spouse.
``(ii) Divorce of the taxpayer.
``(iii) Involuntary conversion of the
residence (within the meaning of section
121(d)(5)(A)).
``(iv) Relocation of duty station or
qualified official extended duty (as defined in
section 121(d)(9)(C)) of the taxpayer or the
taxpayer's spouse who is a member of the
uniformed services (as defined in section
121(d)(9)(C)(ii)), a member of the Foreign
Service of the United States (as defined in
section 121(d)(9)(C)(iii)), or an employee of
the intelligence community (as defined in
section 121(d)(9)(C)(iv)).
``(v) Change of employment of the taxpayer
or the taxpayer's spouse which meets the
conditions of section 217(c).
``(vi) Loss of employment, health
conditions, or such other unforeseen
circumstances as may be specified by the
Secretary.
``(e) Adjustment to Basis.--For purposes of this subtitle, if a
credit is allowed under this section with respect to any property, the
taxpayer's basis in such property shall be reduced by the amount of the
credit so allowed.
``(f) 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.''.
(b) Conforming Amendment Relating to Basis Adjustment.--Subsection
(a) of section 1016 of the Internal Revenue Code of 1986 is amended--
(1) by striking ``and'' at the end of paragraph (36),
(2) by striking the period at the end of paragraph (37) and
inserting ``, and'', and
(3) by adding at the end the following new paragraph:
``(38) to the extent provided in section 36(e).''.
(c) Conforming Amendment.--Section 26(b)(2) of the Internal Revenue
Code of 1986 is amended by striking subparagraph (W) and by
redesignating subparagraphs (X) and (Y) as subparagraphs (W) and (X),
respectively.
(d) Clerical Amendment.--The item relating to section 36 in 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 to read as follows:
``Sec. 36. First-time homebuyer refundable credit.''.
(e) Math Error Authority.--Subparagraph (N) of section 6213(g)(2)
of the Internal Revenue Code of 1986 is amended to read as follows:
``(N) in the case of a return claiming the credit
under section 36--
``(i) the omission of a social security
number required under section 36(c)(1)(A)(iii),
``(ii) the inclusion of a social security
number so required if--
``(I) the claim of the credit on
the return reflects the treatment of
such individual as being of an age
different from the individual's age
based on such social security number,
or
``(II) except as provided in
section 36(c)(1)(B), such social
security number has been included
(other than as a dependent for purposes
of section 151) on a return for any
previous taxable year claiming any
credit or deduction described in
section 36(c)(1)(A)(i), and
``(iii) a claim of such credit for a
taxable year with respect to the purchase of a
residence made after the last day of such
taxable year.''.
(f) IRS Recordkeeping.--Notwithstanding the limitations on
assessment and collection under section 6501 of the Internal Revenue
Code of 1986, the Commissioner of Internal Revenue shall maintain in
perpetuity records of returns and return information (as defined in
section 6103(b)(2) of such Code) of any taxpayer claiming the credit
under section 36 of such Code (as amended by this section) for the
taxable year in which such credit is claimed and succeeding taxable
years. The Commissioner may, in the Commissioner's discretion, discard
such records within a reasonable amount of time after the death of such
taxpayer (and, if married, the taxpayer's spouse).
(g) Effective Date.--The amendments made by this section shall
apply to residences purchased in taxable years beginning after December
31, 2016.
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