First-Time Homebuyer Act of 2021

I 117TH CONGRESS 1ST SESSION H. R. 2863 To amend the Internal Revenue Code to provide for a first-time homebuyer credit, and for other purposes. IN THE HOUSE OF REPRESENTATIVES APRIL 28, 2021 Mr. BLUMENAUER (for himself and Mr. PANETTA) introduced the following bill; which was referred to the Committee on Ways and Means A BILL To amend the Internal Revenue Code to provide for a first- time homebuyer credit, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘First-Time Homebuyer 4 Act of 2021’’. 5 SEC. 2. FIRST-TIME HOMEBUYER REFUNDABLE TAX CRED- 6 IT. 7 (a) IN GENERAL.—Section 36 of the Internal Rev- 8 enue Code of 1986 is amended to read as follows: 9 VerDate Sep 11 2014 05:26 Jun 11, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H2863.IH H2863 pbinns on DSKJLVW7X2PROD with BILLS 2 •HR 2863 IH ‘‘SEC. 36. FIRST-TIME HOMEBUYER CREDIT. 1 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in- 2 dividual who is a first-time homebuyer of a principal resi- 3 dence in the United States during a taxable year, there 4 shall be allowed as a credit against the tax imposed by 5 this subtitle for such taxable year an amount equal to 10 6 percent of the purchase price of the residence. 7 ‘‘(b) LIMITATIONS.— 8 ‘‘(1) DOLLAR LIMITATION.— 9 ‘‘(A) IN GENERAL.—Except as otherwise 10 provided in this paragraph, the credit allowed 11 under subsection (a) shall not exceed $15,000. 12 ‘‘(B) MARRIED INDIVIDUALS FILING SEPA- 13 RATELY.—In the case of a married individual 14 filing a separate return, subparagraph (A) shall 15 be applied by substituting ‘$7,500’ for 16 ‘$15,000’. 17 ‘‘(C) OTHER INDIVIDUALS.—If two or 18 more individuals who are not married purchase 19 a principal residence, the amount of the credit 20 allowed under subsection (a) shall be allocated 21 among such individuals in such manner as the 22 Secretary may prescribe, except that the total 23 amount of the credits allowed to all such indi- 24 viduals shall not exceed $15,000. 25 VerDate Sep 11 2014 05:26 Jun 11, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H2863.IH H2863 pbinns on DSKJLVW7X2PROD with BILLS 3 •HR 2863 IH ‘‘(2) LIMITATION BASED ON AREA MEDIAN IN- 1 COME.— 2 ‘‘(A) IN GENERAL.—No credit shall be al- 3 lowed under subsection (a) to a taxpayer with 4 a modified adjusted gross income that is great- 5 er than the applicable amount. 6 ‘‘(B) MODIFIED ADJUSTED GROSS IN- 7 COME.—For purposes of subparagraph (A), the 8 term ‘modified adjusted gross income’ means 9 the adjusted gross income of the taxpayer for 10 the taxable year increased by any amount ex- 11 cluded from gross income under section 911, 12 931, or 933. 13 ‘‘(C) APPLICABLE AMOUNT.— 14 ‘‘(i) IN GENERAL.—For purposes of 15 subparagraph (A), the term ‘applicable 16 amount’ means an amount that is equal to 17 160 percent of the Area Median Income 18 set by the Secretary of Housing and Urban 19 Development with respect to— 20 ‘‘(I) the area in which the prin- 21 cipal residence is located, 22 ‘‘(II) the size of the household of 23 the taxpayer, and 24 VerDate Sep 11 2014 05:26 Jun 11, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H2863.IH H2863 pbinns on DSKJLVW7X2PROD with BILLS 4 •HR 2863 IH ‘‘(III) the calendar year in which 1 the principal residence is purchased. 2 ‘‘(ii) REGULATIONS AND GUIDANCE.— 3 The Secretary, after consultation with the 4 Secretary of Housing and Urban Develop- 5 ment, shall promulgate such regulations 6 and guidance as are necessary to carry out 7 the purposes of this subparagraph. 8 ‘‘(3) LIMITATION BASED ON AREA MEDIAN PUR- 9 CHASE PRICE.— 10 ‘‘(A) IN GENERAL.—The amount allowable 11 as a credit under subsection (a) (determined 12 without regard to this paragraph) shall be re- 13 duced (but not below zero) by the amount 14 which bears the same ratio to the amount which 15 is so allowable as— 16 ‘‘(i) the excess (if any) of— 17 ‘‘(I) the purchase price of the 18 primary residence, over 19 ‘‘(II) the amount which is equal 20 to 110 percent of the area median 21 purchase price, bears to 22 ‘‘(ii) the amount which is equal to 125 23 percent of the area median purchase price. 24 VerDate Sep 11 2014 05:26 Jun 11, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H2863.IH H2863 pbinns on DSKJLVW7X2PROD with BILLS 5 •HR 2863 IH ‘‘(B) AREA MEDIAN PURCHASE PRICE.— 1 For purposes of this paragraph, the term ‘area 2 median purchase price’ means the average pur- 3 chase price for a home in both the area and the 4 calendar year in which the purchase of the pri- 5 mary residence takes place. 6 ‘‘(C) REGULATIONS AND GUIDANCE.—The 7 Secretary, after consultation with the Secretary 8 of Housing and Urban Development, shall pro- 9 mulgate such regulations and guidance as are 10 necessary to carry out the purposes of this sub- 11 paragraph, including setting purchase price lim- 12 itations for the credit under subsection (a) 13 based on area median income. 14 ‘‘(4) INFLATION ADJUSTMENT.—In the case of 15 any taxable year beginning in a calendar year after 16 2021, each of the dollar amounts in paragraph (1) 17 shall be increased by an amount equal to— 18 ‘‘(A) such dollar amount, multiplied by 19 ‘‘(B) the cost-of-living adjustment deter- 20 mined under section 1(f)(3) for the calendar 21 year in which the taxable year begins, deter- 22 mined by substituting ‘calendar year 2020’ for 23 ‘calendar year 2016’ in subparagraph (A)(ii) 24 thereof. 25 VerDate Sep 11 2014 05:26 Jun 11, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H2863.IH H2863 pbinns on DSKJLVW7X2PROD with BILLS 6 •HR 2863 IH Any increase determined under the preceding sen- 1 tence shall be rounded to the nearest multiple of 2 $100. 3 ‘‘(5) AGE LIMITATION.—No credit shall be al- 4 lowed under subsection (a) with respect to the pur- 5 chase of any residence unless the taxpayer has at- 6 tained age 18 as of the date of such purchase. In 7 the case of any taxpayer who is married (within the 8 meaning of section 7703), the taxpayer shall be 9 treated as meeting the age requirement of the pre- 10 ceding sentence if the taxpayer or the taxpayer’s 11 spouse meets such age requirement. 12 ‘‘(c) DEFINITIONS.—For purposes of this section— 13 ‘‘(1) FIRST-TIME HOMEBUYER.—The term 14 ‘first-time homebuyer’ means any individual if such 15 individual (and if married, such individual’s 16 spouse)— 17 ‘‘(A) has no present ownership interest in 18 any residence during the 3–year period ending 19 on the date of the purchase of the principal res- 20 idence to which this section applies, and 21 ‘‘(B) has not taken the credit in any other 22 taxable year. 23 VerDate Sep 11 2014 05:26 Jun 11, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H2863.IH H2863 pbinns on DSKJLVW7X2PROD with BILLS 7 •HR 2863 IH ‘‘(2) PRINCIPAL RESIDENCE.—The term ‘prin- 1 cipal residence’ has the same meaning as when used 2 in section 121. 3 ‘‘(3) PURCHASE.— 4 ‘‘(A) IN GENERAL.—The term ‘purchase’ 5 means any acquisition, but only if— 6 ‘‘(i) the property is not acquired from 7 a person related to the person acquiring 8 such property (or, if married, such individ- 9 ual’s spouse), and 10 ‘‘(ii) the basis of the property in the 11 hands of the person acquiring such prop- 12 erty is not determined— 13 ‘‘(I) in whole or in part by ref- 14 erence to the adjusted basis of such 15 property in the hands of the person 16 from whom acquired, or 17 ‘‘(II) under section 1014(a) (re- 18 lating to property acquired from a de- 19 cedent). 20 ‘‘(B) CONSTRUCTION.—A residence which 21 is constructed by the taxpayer shall be treated 22 as purchased by the taxpayer on the date the 23 taxpayer first occupies such residence. 24 VerDate Sep 11 2014 05:26 Jun 11, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H2863.IH H2863 pbinns on DSKJLVW7X2PROD with BILLS 8 •HR 2863 IH ‘‘(4) PURCHASE PRICE.—The term ‘purchase 1 price’ means the adjusted basis of the principal resi- 2 dence on the date such residence is purchased. 3 ‘‘(5) RELATED PERSONS.—A person shall be 4 treated as related to another person if the relation- 5 ship between such persons would result in the dis- 6 allowance of losses under section 267 or 707(b). 7 ‘‘(d) EXCEPTIONS.—No credit under subsection (a) 8 shall be allowed to any taxpayer for any taxable year with 9 respect to the purchase of a residence if— 10 ‘‘(1) the taxpayer disposes of such residence (or 11 such residence ceases to be the principal residence of 12 the taxpayer (and, if married, the taxpayer’s 13 spouse)) before the close of such taxable year, 14 ‘‘(2) a deduction under section 151 with respect 15 to such taxpayer is allowable to another taxpayer for 16 such taxable year, or 17 ‘‘(3) the taxpayer fails to attach to the return 18 of tax for such taxable year a properly executed copy 19 of the settlement statement used to complete such 20 purchase. 21 ‘‘(e) REPORTING.—If the Secretary requires informa- 22 tion reporting under section 6045 by a person described 23 in subsection (e)(2) thereof to verify the eligibility of tax- 24 VerDate Sep 11 2014 05:26 Jun 11, 2021 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H2863.IH H2863 pbinns on DSKJLVW7X2PROD with BILLS 9 •HR 2863 IH payers for the credit allowable by this section, the excep- 1 tion provided by section 6045(e) shall not apply. 2 ‘‘(f) RECAPTURE OF CREDIT.— 3 ‘‘(1) IN GENERAL.—Except as otherwise pro- 4 vided in this subsection, if, during any taxable year 5 before the close of the recapture period, a taxpayer 6 disposes of the principal residence with respect to 7 which a credit was allowed under subsection (a) (or 8 such residence ceases to be the principal residence of 9 the taxpayer), the tax imposed by this chapter for 10 such taxable year shall be increased by the recover- 11 able amount determined in paragraph (2). 12 ‘‘(2) RECOVERABLE AMOUNT.—For purposes of 13 paragraph (1), the recoverable amount is the prod- 14 uct of— 15 ‘‘(A) 25 percent of the amount of the cred- 16 it allowed under subsection (a), multiplied by 17 ‘‘(B) the number of taxable years remain- 18 ing in the recapture period as of the beginning 19 of the taxable year in which the taxpayer dis- 20 poses of the principal residence. 21 ‘‘(3) LIMITATION BASED ON GAIN.—In the case 22 of the sale of the principal residence to a person who 23 is not related to the taxpayer, the increase in tax de- 24 termined under paragraph (1) shall not exceed the 25 VerDate Sep 11 2014 05:26 Jun 11, 2021 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H2863.IH H2863 pbinns on DSKJLVW7X2PROD with BILLS 10 •HR 2863 IH amount of gain (if any) on such sale. Solely for pur- 1 poses of the preceding sentence, the adjusted basis 2 of such residence shall be reduced by the amount of 3 the credit allowed under subsection (a). 4 ‘‘(4) EXCEPTIONS.— 5 ‘‘(A) DEATH OF A TAXPAYER.—Paragraph 6 (1) shall not apply to any taxable year ending 7 after the date of the taxpayer’s death. 8 ‘‘(B) INVOLUNTARY CONVERSION.—Para- 9 graph (1) shall not apply in the case of a resi- 10 dence which is compulsorily or involuntarily 11 converted (within the meaning of section 12 1033(a)) if the taxpayer acquires a new prin- 13 cipal residence during the 2-year period begin- 14 ning on the date of the disposition or cessation 15 referred to in paragraph (1). Paragraph (1) 16 shall apply to such new principal residence dur- 17 ing the recapture period in the same manner as 18 if such new principal residence were the con- 19 verted residence. 20 ‘‘(C) TRANSFERS BETWEEN SPOUSES OR 21 INCIDENT TO DIVORCE.—In the case of a trans- 22 fer of a residence to which section 1041(a) ap- 23 plies— 24 VerDate Sep 11 2014 05:26 Jun 11, 2021 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H2863.IH H2863 pbinns on DSKJLVW7X2PROD with BILLS 11 •HR 2863 IH ‘‘(i) paragraph (1) shall not apply to 1 such transfer, and 2 ‘‘(ii) in the case of taxable years end- 3 ing after such transfer, paragraph (1) shall 4 apply to the transferee in the same manner 5 as if such transferee were the transferor 6 (and shall not apply to the transferor). 7 ‘‘(D) SPECIAL RULE FOR MEMBERS OF 8 THE ARMED FORCES, ETC.— 9 ‘‘(i) IN GENERAL.—In the case of the 10 disposition of a principal residence by an 11 individual (or a cessation referred to in 12 paragraph (1)) after December 31, 2019, 13 in connection with Government orders re- 14 ceived by such individual, or such individ- 15 ual’s spouse, for qualified official extended 16 duty service, paragraph (1) and subsection 17 (d)(2) shall not apply to such disposition 18 (or cessation). 19 ‘‘(ii) QUALIFIED OFFICIAL EXTENDED 20 DUTY SERVICE.—For purposes of this sec- 21 tion, the term ‘qualified official extended 22 duty service’ means service on qualified of- 23 ficial extended duty as— 24 VerDate Sep 11 2014 05:26 Jun 11, 2021 Jkt 019200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H2863.IH H2863 pbinns on DSKJLVW7X2PROD with BILLS 12 •HR 2863 IH ‘‘(I) a member of the uniformed 1 services, 2 ‘‘(II) a member of the Foreign 3 Service of the United States, or 4 ‘‘(III) an employee of the intel- 5 ligence community. 6 ‘‘(iii) DEFINITIONS.—Any term used 7 in this subparagraph which is also used in 8 paragraph (9) of section 121(d) shall have 9 the same meaning as when used in such 10 paragraph. 11 ‘‘(E) DISPOSITION OF RESIDENCE IN CON- 12 NECTION WITH CHANGE OF EMPLOYMENT.—In 13 the case of the disposition of a principal resi- 14 dence by an individual (or a cessation referred 15 to in paragraph (1)) after December 31, 2019 16 in connection with a change of employment 17 which meets the conditions described in section 18 217(c), paragraph (1) shall not apply to such 19 disposition (or cessation). 20 ‘‘(5) JOINT RETURNS.—In the case of a credit 21 allowed under subsection (a) with respect to a joint 22 return, half of such credit shall be treated as having 23 been allowed to each individual filing such return for 24 purposes of this subsection. 25 VerDate Sep 11 2014 05:26 Jun 11, 2021 Jkt 019200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\H2863.IH H2863 pbinns on DSKJLVW7X2PROD with BILLS 13 •HR 2863 IH ‘‘(6) RETURN REQUIREMENT.—If the tax im- 1 posed by this chapter for the taxable year is in- 2 creased under this subsection, the taxpayer shall, 3 notwithstanding section 6012, be required to file a 4 return with respect to the taxes imposed under this 5 subtitle. 6 ‘‘(7) RECAPTURE PERIOD.—For purposes of 7 this subsection, the term ‘recapture period’ means 8 the 4 taxable years beginning with the taxable year 9 in which the purchase of the princi [Text truncated for display. 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