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108th CONGRESS
1st Session
S. 1175
To amend the Internal Revenue Code of 1986 to allow a refundable credit
against income tax for the purchase of a principal residence by a
first-time homebuyer.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
June 3, 2003
Ms. Stabenow (for herself, Mr. Smith, and Mr. Dayton) 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 allow a refundable 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. SHORT TITLE.
This Act may be cited as the ``First-Time Homebuyers' Tax Credit
Act of 2003''.
SEC. 2. REFUNDABLE CREDIT FOR FIRST-TIME HOMEBUYERS.
(a) In General.--Subpart C of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 (relating to refundable credits)
is amended by redesignating section 36 as section 37 and by inserting
after section 35 the following new section:
``SEC. 36. 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 subtitle for the taxable year an amount equal to 10
percent of the purchase price of the residence.
``(b) Limitations.--
``(1) Maximum dollar amount.--
``(A) In general.--The credit allowed under
subsection (a) shall not exceed the excess (if any)
of--
``(i) $3,000 ($6,000 in the case of a joint
return), over
``(ii) the credit transfer amount
determined under subsection (c) with respect to
the purchase to which subsection (a) applies.
``(B) Inflation adjustment.--In the case of any
taxable year beginning after December 31, 2003--
``(i) the $3,000 amount under subparagraph
(A) shall be increased by an amount equal to
$3,000, multiplied by the cost-of-living
adjustment determined under section 1(f)(3) for
the calendar year in which the taxable year
begins by substituting `2002' for `1992' in
subparagraph (B) thereof, and
``(ii) the $6,000 amount under subparagraph
(A) shall be increased to twice the $3,000
amount, as adjusted under clause (i) for the
taxable year.
If the $3,000 amount as adjusted under clause (i) is
not a multiple of $10, such amount shall be rounded to
the nearest multiple of $10.
``(2) Taxable income limitation.--
``(A) In general.--If the taxable income of the
taxpayer for any taxable year exceeds the maximum
taxable income in the table under subsection (a), (b),
(c), or (d) of section 1, whichever is applicable, to
which the 25 percent rate applies, the dollar amounts
in effect under paragraph (1)(A)(i) for such taxpayer
for the following taxable year shall be reduced (but
not below zero) by the amount of the excess.
``(B) Change in return status.--In the case of
married individuals filing a joint return for any
taxable year who did not file such a joint return for
the preceding taxable year, subparagraph (A) shall be
applied by reference to the highest taxable income of
either such individual for the preceding taxable year.
``(c) Transfer of Credit.--
``(1) In general.--A taxpayer may transfer all or a portion
of the credit allowable under subsection (a) to 1 or more
persons as payment of any liability of the taxpayer arising out
of--
``(A) the downpayment of any portion of the
purchase price of the principal residence, and
``(B) closing costs in connection with the purchase
(including any points or other fees incurred in
financing the purchase).
``(2) Credit transfer mechanism.--
``(A) In general.--Not less than 180 days after the
date of the enactment of this Act, the Secretary shall
establish and implement a credit transfer mechanism for
purposes of paragraph (1). Such mechanism shall require
the Secretary to--
``(i) certify that the taxpayer is eligible
to receive the credit provided by this section
with respect to the purchase of a principal
residence and that the transferee is eligible
to receive the credit transfer,
``(ii) certify that the taxpayer has not
received the credit provided by this section
with respect to the purchase of any other
principal residence,
``(iii) certify the credit transfer amount
which will be paid to the transferee, and
``(iv) require any transferee that directly
receives the credit transfer amount from the
Secretary to notify the taxpayer within 14 days
of the receipt of such amount.
Any check, certificate, or voucher issued by the
Secretary pursuant to this paragraph shall include the
taxpayer identification number of the taxpayer and the
address of the principal residence being purchased.
``(B) Timely receipt.--The Secretary shall issue
the credit transfer amount not less than 30 days after
the date of the receipt of an application for a credit transfer.
``(3) Payment of interest.--
``(A) In general.--Notwithstanding any other
provision of this title, the Secretary shall pay
interest on any amount which is not paid to a person
during the 30-day period described in paragraph (2)(B).
``(B) Amount of interest.--Interest under
subparagraph (A) shall be allowed and paid--
``(i) from the day after the 30-day period
described in paragraph (2)(B) to the date
payment is made, and
``(ii) at the overpayment rate established
under section 6621.
``(C) Exception.--This paragraph shall not apply to
failures to make payments as a result of any natural
disaster or other circumstance beyond the control of
the Secretary.
``(4) Effect on legal rights and obligations.--Nothing in
this subsection shall be construed to--
``(A) require a lender to complete a loan
transaction before the credit transfer amount has been
transferred to the lender, or
``(B) prevent a lender from altering the terms of a
loan (including the rate, points, fees, and other
costs) due to changes in market conditions or other
factors during the period of time between the
application by the taxpayer for a credit transfer and
the receipt by the lender of the credit transfer
amount.
``(d) 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, except that the total
amount of the credits allowed to all such
individuals shall not exceed the amount in
effect under subsection (b)(1)(A) for
individuals filing joint returns.
``(2) Principal residence.--The term `principal residence'
has the same meaning as when used in section 121. Except as
provided in regulations, an interest in a partnership, S
corporation, or trust which owns an interest in a residence
shall not be treated as an interest in a residence for purposes
of this paragraph.
``(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)).
``(e) 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.
``(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.--
``(1) In general.--The provisions of this section apply to
a principal residence if--
``(A) the taxpayer purchases the residence on or
after January 1, 2003, and before January 1, 2010, or
``(B) the taxpayer enters into, on or after January
1, 2003, and before January 1, 2010, a binding contract
to purchase the residence, and purchases and occupies
the residence before July 1, 2011.''.
(b) Conforming Amendments.--
(1) Subsection (a) of section 1016 of the Internal Revenue
Code of 1986 (relating to general rule for adjustments to
basis) is amended by striking ``and'' at the end of paragraph
(27), by striking the period at the end of paragraph (28) and
inserting
``, and'', and by adding at the end the following new
paragraph:
``(29) in the case of a residence with respect to which a
credit was allowed under section 36, to the extent provided in
section 36(f).''.
(2) Section 1324(b)(2) of title 31, United States Code, is
amended by striking ``or'' before ``enacted'' and by inserting
before the period at the end ``, or from section 36 of such
Code''.
(c) Clerical Amendment.--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 by striking the item relating to section 36 and
inserting the following new items:
``Sec. 36. Purchase of principal
residence by first-time
homebuyer.
``Sec. 37. Overpayments of tax.''.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2002.
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