Home > 106th Congressional Bills > H.R. 83 (ih) To modify the provision of law which provides a permanent appropriation for the compensation of Members of Congress, and for other purposes. [Introduced in House] ...H.R. 83 (ih) To modify the provision of law which provides a permanent appropriation for the compensation of Members of Congress, and for other purposes. [Introduced in House] ...
108th CONGRESS
1st Session
H. R. 839
To amend the Internal Revenue Code of 1986 to allow an income tax
credit for the provision of homeownership and community development,
and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
February 13, 2003
Mr. Portman (for himself, Mr. Cardin, Ms. Pryce of Ohio, Mr. English,
Mrs. Jones of Ohio, Mr. Bonilla, Mr. Terry, Mr. Gary G. Miller of
California, Ms. Jackson-Lee of Texas, Mr. Burgess, and Ms. Harris)
introduced the following bill; which was referred to the Committee on
Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to allow an income tax
credit for the provision of homeownership and community development,
and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; ETC.
(a) Short Title.--This Act may be cited as the ``Renewing the Dream
Tax Credit Act''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this Act an amendment or repeal is expressed in
terms of an amendment to, or repeal of, a section or other provision,
the reference shall be considered to be made to a section or other
provision of the Internal Revenue Code of 1986.
SEC. 2. COMMUNITY HOMEOWNERSHIP CREDIT.
(a) In General.--Subpart D of part IV of subchapter A of chapter 1
is amended by inserting after section 42 the following new section:
``SEC. 42A. COMMUNITY HOMEOWNERSHIP CREDIT.
``(a) Allowance of Credit.--For purposes of section 38, the amount
of the homeownership credit determined under this section for any
taxable year in the credit period shall be an amount equal to the
applicable percentage of the eligible basis of each qualified
residence.
``(b) Applicable Percentage.--For purposes of this section--
``(1) In general.--The term `applicable percentage' means
the appropriate percentage prescribed by the Secretary for the
month in which the taxpayer and the homeownership credit agency
enter into an agreement with respect to such residence (which
is binding on such agency, the taxpayer, and all successors in
interest) as to the homeownership credit dollar amount to be
allocated to such residence.
``(2) Method of prescribing percentage.--The percentage
prescribed by the Secretary for any month shall be the
percentage which will yield over a 5-year period amounts of
credit under subsection (a) which have a present value equal to
50 percent of the eligible basis of a qualified residence.
``(3) Method of discounting.--The present value under
paragraph (2) shall be determined--
``(A) as of the last day of the 1st year of the 5-
year period referred to in paragraph (2),
``(B) by using a discount rate equal to 72 percent
of the annual Federal mid-term rate applicable under
section 1274(d)(1) to the month applicable under
paragraph (1) and compounded annually, and
``(C) by assuming that the credit allowable under
this section for any year is received on the last day
of such year.
``(c) Qualified Residence.--For purposes of this section--
``(1) In general.--The term `qualified residence' means any
residence--
``(A) which is located--
``(i) in a census tract which has a median
gross income which does not exceed 80 percent
of the greater of area or statewide median
gross income,
``(ii) in a rural area (as defined under
section 520 of the Housing Act of 1949),
``(iii) on a reservation for a federally
recognized Indian tribe, or
``(iv) in an area of chronic economic
distress, and
``(B) which is purchased by a qualified buyer.
For purposes of subparagraph (A)(iv), an area is an area of
chronic economic distress if it is approved for designation as
such under section 143(j)(3); except that such designation
shall not require the approval of the Secretary, shall be
deemed to be approved by the Secretary of Housing and Urban
Development if not approved or disapproved by the Secretary of
Housing and Urban Development within 60 days after submission
for approval for purposes of section 143(j)(3)(A)(ii), and
shall cease to apply after the end of the 5th calendar year
after the calendar year in which the designation is made.
``(2) Residence.--For purposes of paragraph (1), the term
`residence' means--
``(A) a single-family home containing 1 to 4
housing units,
``(B) a condominium unit, or
``(C) stock in a cooperative housing corporation
(as defined in section 216(b)).
In the case of a single-family home described in subparagraph
(A) that contains more than one housing unit, the term
`residence' shall not include any new residence and shall
include only the portion of such home that is occupied by the
owner thereof (determined based on the percentage of the total
area of such home that is occupied by the owner). In the case
of subparagraphs (A), (B), and (C), factory-built homes shall
be included in the definition of residence.
``(3) Timing of determination.--For purposes of paragraph
(1), the determination of whether a residence is a qualified
residence shall be made at the time a binding commitment for an
allocation of credit is awarded by the homeownership credit
agency; except that the determination of whether a purchaser is
a qualified buyer shall be made at the time the residence is
sold.
``(4) Median gross income.--For purposes of this section,
median gross income shall be determined consistent with section
143(f)(2).
``(d) Eligible Basis.--For purposes of this section--
``(1) New qualified residences.--
``(A) In general.--The eligible basis of a new
qualified residence is--
``(i) in the case of a qualified residence
which is sold in a transaction which meets the
requirements of subparagraph (B), its adjusted
basis (excluding land) immediately before such
sale, and
``(ii) zero in any other case.
``(B) Requirements.--A sale of a qualified
residence meets the requirements of this subparagraph
if--
``(i) the buyer acquires the qualified
residence by purchase (as defined in section
179(d)(2)),
``(ii) the buyer of the qualified residence
is not a related person with respect to the
seller, and
``(iii) in the case of a seller who
materially participates in the development of
the residence, the buyer's debt financing is
originated by a third party who is not a
related person with respect to such seller.
``(2) Existing qualified residences.--
``(A) In general.--The eligible basis of an
existing qualified residence is--
``(i) in the case of a qualified residence
which is sold in a transaction which meets the
requirements of subparagraph (B), its adjusted
basis (excluding land) immediately before such
sale, and
``(ii) zero in any other case.
``(B) Requirements.--A sale of a qualified
residence meets the requirements of this subparagraph
if--
``(i) the buyer acquires the qualified
residence by purchase (as defined in section
179(d)(2)),
``(ii) the qualified residence has
undergone substantial rehabilitation in
connection with the sale described in clause
(i),
``(iii) the buyer of the qualified
residence is not a related person with respect
to the seller, and
``(iv) in the case of a seller who
materially participates in the development of
the residence, the buyer's debt financing is
originated by a third party who is not a
related person with respect to such seller.
``(C) Substantial rehabilitation.--
``(i) In general.--For purposes of
subparagraph (B), substantial rehabilitation
means rehabilitation expenditures paid or
incurred with respect to a qualified residence
that are at least $15,000.
``(ii) Inflation adjustment.--In the case
of a calendar year after 2003, the dollar
amount contained in clause (i) 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 2002' for
`calendar year 1992' in subparagraph
(B) thereof.
Any increase under clause (ii) which is not a
multiple of $1,000 shall be rounded to the next
lowest multiple of $1,000.
``(D) Limitation on acquisition basis.--The
eligible basis of an existing qualified residence may
not exceed 150 percent of the qualified rehabilitation
expenditures.
``(3) Effect of subsequent sale, etc.--A subsequent sale,
assignment, rental, or refinancing of the qualified residence
by the buyer or the subsequent sale, assignment, or pooling of
the buyer's financing by the originator shall not be considered
in determining whether or not the prior sales transaction
satisfied the requirements of subparagraph (B) of paragraph (1)
or (2).
``(4) Special rules relating to determination of adjusted
basis.--For purposes of this subsection--
``(A) In general.--Except as provided in
subparagraph (B), the adjusted basis of any qualified
residence--
``(i) shall not include so much of the
basis of such qualified residence as is
determined by reference to the basis of
other property held at any time by the person acquiring the residence,
and
``(ii) shall be determined without regard
to the adjusted basis of any property which is
not part of such qualified residence.
``(B) Basis of property in common areas, etc.,
included.--The adjusted basis of any qualified
residence shall be determined by taking into account
(on a pro rata basis) the adjusted basis of property
(other than land) used in common areas or provided as
comparable amenities to all residences within a
project.
``(5) Special rules for determining eligible basis.--
``(A) Related person, etc.--For purposes of this
section, a person (in this clause referred to as the
`related person') is related to any person if the
related person bears a relationship to such person
specified in section 267(b) or 707(b)(1), or the
related person and such person are engaged in trades or
businesses under common control (within the meaning of
subsections (a) and (b) of section 52). For purposes of
the preceding sentence, in applying section 267(b) or
707(b)(1), `10 percent' shall be substituted for `50
percent'.
``(B) Nonresidential space excluded.--No portion of
the eligible basis of a qualified residence shall
include costs attributable to nonresidential space.
``(C) Limitation.--The eligible basis of any
residence may not exceed the mortgage limit for Federal
Housing Administration insured mortgages for single
family homes in the area in which such residence is
located.
``(e) Definition and Special Rules Relating to Credit Period.--
``(1) Credit period defined.--For purposes of this section,
the term `credit period' means, with respect to any qualified
residence, the period of 5 taxable years beginning with the
taxable year in which the sale of the qualified residence
occurs satisfying the requirements of subsection (d)(1)(B) or
(d)(2)(B).
``(2) Special rule for 1st year of credit period.--
``(A) In general.--The credit allowable under
subsection (a) with respect to any qualified residence
for the 1st taxable year of the credit period shall be
determined by multiplying the eligible basis under
subsection (d) by the fraction--
``(i) the numerator of which is the sum of
the number of remaining whole months in such
1st taxable year after the sale of the
qualified residence, and
``(ii) the denominator of which is 12.
``(B) Disallowed 1st year credit allowed in 6th
year.--Any reduction by reason of subparagraph (A) in
the credit allowable (without regard to subparagraph
(A)) for the 1st taxable year of the credit period
shall be allowable under subsection (a) for the 1st
taxable year following the credit period.
``(f) Limitation on Aggregate Credit Allowable With Respect to
Qualified Residences Located in a State.--
``(1) Credit may not exceed credit dollar amount allocated
to qualified residence.--
``(A) In general.--The amount of the credit
determined under this section for any taxable year with
respect to any qualified residence shall not exceed the
homeownership credit dollar amount allocated to such
qualified residence under this subsection.
``(B) Time for making allocation.--
``(i) An allocation shall be taken into
account under subparagraph (A) only if it is
made not later than the close of the calendar
year in which the qualified residence is sold.
``(ii) A homeownership credit agency may
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