,,ii  #aah? ,,congress  #b;d ,session   
,s4 #cidj  ,,9 ,,! ,,s5ate ,,( ,,!      
,,unit$ ,,/ates  ,m>* #ad1 #bjbd,mr4    
,:iteh\se 7= himself1 ,mr4 ,he9ri*1 ,mr4
 ,wel*1 ,ms4 ,smi?1 ,mr4 ,re$1 ,ms4     
,baldw91 & ,ms4 ,ros57 introduc$ !      
foll[+ bill2 :i* 0 read twice & ref]r$  
to ! ,committee on ,f9ance  ,a ,,bill   
,to am5d ! ,int]nal ,rev5ue ,code (     
#aihf to provide = a fir/-"t homebuy]   
cr$it1 & = o!r purposes4  #a4 ,%ort     
title ,?is ,act may be cit$ z !         
,fir/-,"t ,homebuy] ,tax ,cr$it ,act (  
#bjbd4  #b4 ,fir/-"t homebuy] refundable
 tax cr$it  7a7 ,9 g5]al ,section #cf ( 
! ,int]nal ,rev5ue ,code ( #aihf is     
am5d$ to read z foll[s3  #cf4 ,fir/-"t  
homebuy] cr$it  7a7 ,all[ance ( cr$it ,9
 ! case ( an individual :o is a fir/-"t 
homebuy] ( a pr9cipal resid5ce 9 !      
,unit$ ,/ates dur+ a taxable ye>1 !re   
%all be all[$ z a cr$it aga9/ ! tax     
impos$ by ?is subtitle = su* taxable ye>
 an am\nt equal to #aj p]c5t ( ! pur*ase
 price ( ! resid5ce4  7b7 ,limitations  

7#a7 ,doll> limitation  7,a7 ,9 g5]al   
,except z o!rwise provid$ 9 ?is         
p>agraph1 ! cr$it all[$ "u subsection   
7a7 %all n exce$ #ae1jjj4  7,b7 ,m>ri$  
individuals fil+ sep>ately ,9 ! case ( a
 m>ri$ individual fil+ a sep>ate return1
 subp>agraph 7,a7 %all be appli$ by     
sub/itut+ #g1ejj = #ae1jjj4  7,c7 ,o!r  
individuals ,if #b or m individuals :o  
are n m>ri$ pur*ase a pr9cipal resid5ce1
 ! am\nt ( ! cr$it all[$ "u subsection  
7a7 %all be allocat$ among su*          
individuals 9 su* mann] z ! ,secret>y   
may prescribe1 except t ! total am\nt ( 
! cr$its all[$ to all su* individuals   
%all n exce$ #ae1jjj4  7#b7 ,phase\t    
bas$ on area m$ian income  7,a7 ,9 g5]al
 ,! am\nt all[able z a cr$it "u         
subsection 7a7 7det]m9$ )\t reg>d to ?is
 p>agraph7 %all be r$uc$ 7b n bel[ z]o7 
by ! am\nt :i* be>s ! same ratio to !   
am\nt :i* is s all[able z-- 7i7 ! excess
 7if any7 (-- 7,i7 ! modifi$ adju/$     
gross income ( ! taxpay] = ! taxable    
ye>1 ov]  7,,ii7 #aej p]c5t ( !         

applicable ,area ,m$ium ,income1 be>s to
  7ii7 #bj p]c5t ( ! applicable ,area   
,m$ian ,income4  7,b7 ,modifi$ adju/$   
gross income ,= purposes ( subp>agraph  
7,a71 ! t]m modifi$ adju/$ gross income 
means ! adju/$ gross income ( ! taxpay] 
= ! taxable ye> increas$ by any am\nt   
exclud$ f gross income "u section #iaa1 
#ica1 or #icc4  7,c7 ,applicable ,area  
,m$ian ,income ,= purposes ( subp>agraph
 7,a71 ! t]m applicable ,area ,m$ian    
,income means ! ,area ,m$ian ,income set
 by ! ,secret>y ( ,h\s+ & ,urban        
,developm5t ) respect to-- 7i7 ! area 9 
:i* ! pr9cipal resid5ce is locat$1  7ii7
 ! size ( ! h\sehold ( ! taxpay]1 &     
7iii7 ! cal5d> ye> 9 :i* ! pr9cipal     
resid5ce is pur*as$4  7,d7 ,regulations 
& guidance ,! ,secret>y1 aft]           
consultation ) ! ,secret>y ( ,h\s+ &    
,urban ,developm5t1 %all issue su*      
regulations & guidance z are necess>y to
 c>ry out ! purposes ( ?is subp>agraph4 
7#c7 ,limitation bas$ on area m$ian     
pur*ase price  7,a7 ,9 g5]al ,! am\nt   

all[able z a cr$it "u subsection 7a7    
7det]m9$ )\t reg>d to ?is p>agraph7 %all
 be r$uc$ 7b n bel[ z]o7 by ! am\nt :i* 
be>s ! same ratio to ! am\nt :i* is s   
all[able z-- 7i7 ! excess 7if any7 (--  
7,i7 ! pur*ase price ( ! pr9cipal       
resid5ce1 ov]  7,,ii7 ! am\nt :i* is    
equal to #aaj p]c5t ( ! area m$ian      
pur*ase price1 be>s to  7ii7 ! am\nt :i*
 is equal to #ae p]c5t ( ! area m$ian   
pur*ase price4  7,b7 ,area m$ian pur*ase
 price ,= purposes ( ?is p>agraph1 ! t]m
 area m$ian pur*ase price means ! m$ian 
pur*ase price = a home 9 bo? ! area & ! 
cal5d> ye> 9 :i* ! pur*ase ( ! pr9cipal 
resid5ce takes place4  7,c7 ,regulations
 & guidance ,! ,secret>y1 aft]          
consultation ) ! ,secret>y ( ,h\s+ &    
,urban ,developm5t1 %all promulgate su* 
regulations & guidance z are necess>y to
 c>ry out ! purposes ( ?is subp>agraph1 
includ+ = det]m9+ ! area m$ian pur*ase  
price ) respect to diff]5t localities4  
7#d7 ,inflation adju/m5t ,9 ! case ( any
 taxable ye> beg9n+ 9 a cal5d> ye> aft] 

#bjbd1 ea* ( ! doll> am\nts 9 p>agraph  
7#a7 %all be increas$ by an am\nt equal 
to-- 7,a7 su* doll> am\nt1 multipli$ by 
7,b7 ! co/-(-liv+ adju/m5t det]m9$ "u   
section #a7;f77#c7 = ! cal5d> ye> 9 :i* 
! taxable ye> beg9s1 det]m9$ by         
sub/itut+ cal5d> ye> #bjbc = cal5d> ye> 
#bjaf 9 subp>agraph 7,a77ii7 !re(4  ,any
 increase det]m9$ "u ! prec$+ s5t5ce    
%all be r\nd$ to ! ne>e/ multiple (     
#ajj4  7#e7 ,age limitation ,no cr$it   
%all be all[$ "u subsection 7a7 )       
respect to ! pur*ase ( any resid5ce     
unless ! taxpay] has atta9$ age #ah z ( 
! date ( su* pur*ase4 ,9 ! case ( any   
taxpay] :o is m>ri$ 7)9 ! mean+ (       
section #ggjc71 ! taxpay] %all be treat$
 z meet+ ! age requirem5t ( ! prec$+    
s5t5ce if ! taxpay] or ! taxpay]'s sp\se
 meets su* age requirem5t4  7c7         
,def9itions ,= purposes ( ?is section-- 
7#a7 ,fir/-"t homebuy] ,! t]m fir/-"t   
homebuy] means any individual if su*    
individual 7& if m>ri$1 su* individual's
 sp\se7-- 7,a7 has no pres5t own]%ip    

int]e/ 9 any resid5ce dur+ ! #c-ye>     
p]iod end+ on ! date ( ! pur*ase ( !    
pr9cipal resid5ce to :i* ?is section    
applies1 &  7,b7 has n tak5 ! cr$it 9   
any o!r taxable ye>4  7#b7 ,pr9cipal    
resid5ce ,! t]m pr9cipal resid5ce has ! 
same mean+ z :5 us$ 9 section #aba4     
7#c7 ,pur*ase  7,a7 ,9 g5]al ,! t]m     
pur*ase means any acquisition1 b only   
if-- 7i7 ! prop]ty is n acquir$ f a     
p]son relat$ to ! p]son acquir+ su*     
prop]ty 7or1 if m>ri$1 su* individual's 
sp\se71  7ii7 ! acquisition is f9anc$   
?r\gh a f$]ally back$ mortgage loan 7z  
def9$ 9 section #djbb ( ! ,,c>es ,act71 
&  7iii7 ! basis ( ! prop]ty 9 ! h&s ( !
 p]son acquir+ su* prop]ty is n         
det]m9$-- 7,i7 9 :ole or 9 "p by ref]5ce
 to ! adju/$ basis ( su* prop]ty 9 ! h&s
 ( ! p]son f :om acquir$1 or  7,,ii7 "u 
section #ajad7;a7 7relat+ to prop]ty    
acquir$ f a dec$5t74  7,b7 ,con/ruction 
,a resid5ce :i* is con/ruct$ by !       
taxpay] %all be treat$ z pur*as$ by !   
taxpay] on ! date ! taxpay] fir/        

occupies su* resid5ce4  7#d7 ,pur*ase   
price ,! t]m pur*ase price means !      
adju/$ basis ( ! pr9cipal resid5ce on ! 
date su* resid5ce is pur*as$4  7#e7     
,relat$ p]sons ,a p]son %all be treat$ z
 relat$ to ano!r p]son if ! relation%ip 
betwe5 su* p]sons w\ld result 9 !       
disall[ance ( losses "u section #bfg or 
#gjg7;b74  7d7 ,exceptions ,no cr$it "u 
subsection 7a7 %all be all[$ to any     
taxpay] = any taxable ye> ) respect to !
 pur*ase ( a resid5ce if-- 7#a7 !       
taxpay] disposes ( su* resid5ce 7or su* 
resid5ce ceases to be ! pr9cipal        
resid5ce ( ! taxpay] 7&1 if m>ri$1 !    
taxpay]'s sp\se77 be=e ! close ( su*    
taxable ye>1  7#b7 a d$uction "u section
 #aea ) respect to su* taxpay] is       
all[able to ano!r taxpay] = su* taxable 
ye>1 or  7#c7 ! taxpay] fails to atta*  
to ! return ( tax = su* taxable ye> a   
prop]ly execut$ copy ( ! settlem5t      
/atem5t us$ to complete su* pur*ase4    
7e7 ,report+ ,if ! ,secret>y requires   
in=mation report+ "u section #fjde by a 

p]son describ$ 9 subsection 7e77#b7 !re(
 to v]ify ! eligibility ( taxpay]s = !  
cr$it all[able by ?is section1 !        
exception provid$ by section #fjde7;e7  
%all n apply4  7f7 ,recapture ( cr$it   
7#a7 ,9 g5]al ,except z o!rwise provid$ 
9 ?is subsection1 if1 dur+ any taxable  
ye> be=e ! close ( ! recapture p]iod1 a 
taxpay] disposes ( ! pr9cipal resid5ce )
 respect to :i* a cr$it 0 all[$ "u      
subsection 7a7 7or su* resid5ce ceases  
to be ! pr9cipal resid5ce ( ! taxpay]71 
! tax impos$ by ?is *apt] = su* taxable 
ye> %all be increas$ by ! recov]able    
am\nt det]m9$ 9 p>agraph 7#b74  7#b7    
,recov]able am\nt ,= purposes ( p>agraph
 7#a71 ! recov]able am\nt is ! product  
(-- 7,a7 #be p]c5t ( ! am\nt ( ! cr$it  
all[$ "u subsection 7a71 multipli$ by   
7,b7 ! numb] ( taxable ye>s rema9+ 9 !  
recapture p]iod z ( ! beg9n+ ( ! taxable
 ye> 9 :i* ! taxpay] disposes ( !       
pr9cipal resid5ce4  7#c7 ,limitation    
bas$ on ga9 ,9 ! case ( ! sale ( !      
pr9cipal resid5ce to a p]son :o is n    

relat$ to ! taxpay]1 ! increase 9 tax   
det]m9$ "u p>agraph 7#a7 %all n exce$ ! 
am\nt ( ga9 7if any7 on su* sale4       
,solely = purposes ( ! prec$+ s5t5ce1 ! 
adju/$ basis ( su* resid5ce %all be     
r$uc$ by ! am\nt ( ! cr$it all[$ "u     
subsection 7a74  7#d7 ,exceptions  7,a7 
,dea? ( a taxpay] ,p>agraph 7#a7 %all n 
apply to any taxable ye> end+ aft] !    
date ( ! taxpay]'s dea?4  7,b7          
,involunt>y conv]sion ,p>agraph 7#a7    
%all n apply 9 ! case ( a resid5ce :i*  
is compulsorily or involunt>ily conv]t$ 
7)9 ! mean+ ( section #ajcc7;a77 if !   
taxpay] acquires a new pr9cipal resid5ce
 dur+ ! #b-ye> p]iod beg9n+ on ! date ( 
! disposition or cessation ref]r$ to 9  
p>agraph 7#a74 ,p>agraph 7#a7 %all apply
 to su* new pr9cipal resid5ce dur+ !    
recapture p]iod 9 ! same mann] z if su* 
new pr9cipal resid5ce 7 ! conv]t$       
resid5ce4  7,c7 ,transf]s betwe5 sp\ses 
or incid5t to divorce ,9 ! case ( a     
transf] ( a resid5ce to :i* section     
#ajda7;a7 applies-- 7i7 p>agraph 7#a7   

%all n apply to su* transf]1 &  7ii7 9 !
 case ( taxable ye>s end+ aft] su*      
transf]1 p>agraph 7#a7 %all apply to !  
transf]ee 9 ! same mann] z if su*       
transf]ee 7 ! transf]or 7& %all n apply 
to ! transf]or74  7,d7 ,special rule =  
memb]s ( ! arm$ =ces1 etc  7i7 ,9 g5]al 
,9 ! case ( ! disposition ( a pr9cipal  
resid5ce by an individual 7or a         
cessation ref]r$ to 9 p>agraph 7#a77    
aft] ,decemb] #ca1 #bjba1 9 connection )
 ,gov]nm5t ord]s receiv$ by su*         
individual1 or su* individual's sp\se1 =
 qualifi$ (ficial ext5d$ duty s]vice1   
p>agraph 7#a7 & subsection 7d77#b7 %all 
n apply to su* disposition 7or          
cessation74  7ii7 ,qualifi$ (ficial     
ext5d$ duty s]vice ,= purposes ( ?is    
section1 ! t]m qualifi$ (ficial ext5d$  
duty s]vice means s]vice on qualifi$    
(ficial ext5d$ duty z-- 7,i7 a memb] ( !
 uni=m$ s]vices1  7,,ii7 a memb] ( !    
,=eign ,s]vice ( ! ,unit$ ,/ates1 or    
7,,iii7 an employee ( ! intellig5ce     
community4  7iii7 ,def9itions ,any t]m  

us$ 9 ?is subp>agraph :i* is also us$ 9 
p>agraph 7#i7 ( section #aba7;d7 %all h 
! same mean+ z :5 us$ 9 su* p>agraph4   
7,e7 ,disposition ( resid5ce 9          
connection ) *ange ( employm5t ,9 ! case
 ( ! disposition ( a pr9cipal resid5ce  
by an individual 7or a cessation ref]r$ 
to 9 p>agraph 7#a77 aft] ,decemb] #ca1  
#bjba 9 connection ) a *ange ( employm5t
 :i* meets ! conditions describ$ 9      
section #bag7;c71 p>agraph 7#a7 %all n  
apply to su* disposition 7or cessation74
  7#e7 ,jo9t returns ,9 ! case ( a cr$it
 all[$ "u subsection 7a7 ) respect to a 
jo9t return1 half ( su* cr$it %all be   
treat$ z hav+ be5 all[$ to ea*          
individual fil+ su* return = purposes ( 
?is subsection4  7#f7 ,return requirem5t
 ,if ! tax impos$ by ?is *apt] = !      
taxable ye> is increas$ "u ?is          
subsection1 ! taxpay] %all1 not)/&+     
section #fjab1 be requir$ to file a     
return ) respect to ! taxes impos$ "u   
?is subtitle4  7#g7 ,recapture p]iod ,= 
purposes ( ?is subsection1 ! t]m        

recapture p]iod means ! #d taxable ye>s 
beg9n+ ) ! taxable ye> 9 :i* ! pur*ase (
 ! pr9cipal resid5ce = :i* a cr$it is   
all[$ "u subsection 7a7 0 made4  7g7    
,election ,to treat pur*ase 9 prior ye> 
,9 ! case ( a pur*ase ( a pr9cipal      
resid5ce aft] ,decemb] #ca1 #bjbb1 a    
taxpay] may elect to treat su* pur*ase z
 made on ,decemb] #ca ( ! cal5d> ye>    
prec$+ su* pur*ase = purposes ( ?is     
section 7o!r ?an subsections 7b77#d71   
7c71 & 7h774  7h7 ,transf] ( cr$it  7#a7
 ,9 g5]al ,subject to su* regulations & 
o!r guidance z ! ,secret>y det]m9es     
necess>y1 a taxpay] may elect t ! cr$it 
:i* w\ld 7b = ?is subsection7 be all[$  
to su* taxpay] ) respect to ! pur*ase ( 
a pr9cipal resid5ce %all be all[$ to !  
mortgage l5d] ) respect to su* pur*ase &
 n to su* taxpay]4  7#b7 ,eligible      
entity ,= purposes ( ?is subsection1 !  
t]m eligible entity means1 ) respect to 
! pur*ase ( ! pr9cipal resid5ce = :i* ! 
cr$it is all[$ "u subsection 7a71 !     
mortgage l5d] :i* provides ! mortgage to

 ! taxpay] & has-- 7,a7 regi/]$ ) !     
,secret>y = purposes ( ?is p>agraph1 at 
su* "t1 & 9 su* =m & mann]1 z !         
,secret>y may prescribe1  7,b7 prior to 
! election describ$ 9 p>agraph 7#a7 & n 
lat] ?an at ! "t ( su* pur*ase1 disclos$
 to ! taxpay] mak+ su* pur*ase-- 7i7 !  
value ( ! cr$it all[$ "u subsection 7a71
 &  7ii7 ! am\nt provid$ by ! mortgage  
l5d] to su* taxpay] z a condition ( !   
election describ$ 9 p>agraph 7#a74  7,c7
 n lat] ?an at ! "t ( su* pur*ase1 made 
paym5t to su* taxpay] 7:e!r 9 ca% or 9 !
 =m ( a p>tial paym5t or d[n paym5t = ! 
pur*ase ( su* pr9cipal resid5ce7 9 an   
am\nt equal to ! cr$it o!rwise all[able 
to su* taxpay]1 &  7,d7 ) respect to any
 inc5tive o!rwise available = tak+ a    
mortgage = :i* a cr$it is all[$ "u ?is  
section1 includ+ any inc5tive 9 ! =m ( a
 rebate or disc\nt provid$ by ! mortgage
 l5d]1 ensur$ t-- 7i7 ! availability or 
use ( su* inc5tive %all n limit !       
ability ( a taxpay] to make an election 
describ$ 9 p>agraph 7#a71 &  7ii7 su*   

election %all n limit ! value or use (  
su* inc5tive4  7#c7 ,tim+ ,an election  
describ$ 9 p>agraph 7#a7 %all be made by
 ! taxpay] n lat] ?an ! date on :i* !   
pur*ase ( ! pr9cipal resid5ce ) respect 
to :i* ! cr$it "u subsection 7a7 is     
all[$ is made4  7#d7 ,revocation (      
regi/ration ,^u det]m9ation by !        
,secret>y t a mortgage l5d] has fail$ to
 comply ) ! requirem5ts describ$ 9      
p>agraph 7#b71 ! ,secret>y may revoke ! 
regi/ration 7z describ$ 9 subp>agraph   
7,a7 ( su* p>agraph7 ( su* mortgage     
l5d]4  7#e7 ,tax treatm5t ( paym5ts ,)  
respect to any paym5t describ$ 9        
p>agraph 7#b77;,c71 su* paym5t-- 7,a7   
%all n be includible 9 ! gross income ( 
! taxpay]1 &  7,b7 ) respect to !       
mortgage l5d]1 %all n be d$uctible "u   
?is title4  7#f7 ,advance paym5t to     
mortgage l5d]s  7,a7 ,9 g5]al ,!        
,secret>y %all e/abli% a program to make
 advance paym5ts to any eligible entity 
9 an am\nt equal to ! cumulative am\nt (
 ! cr$its all[$ "u subsection 7a7 )     

respect to any mortgages issu$ by su*   
entity = :i* an election describ$ 9     
p>agraph 7#a7 has be5 made4  7,b7       
,excessive paym5ts ,rules simil> to !   
rules ( section #fdag7;d77#f7 %all apply
 = purposes ( ?is p>agraph4  7,c7       
,treatm5t ( advance paym5ts ,= purposes 
( section #acbd ( title #ca1 ,unit$     
,/ates ,code1 ! paym5ts "u subp>agraph  
7,a7 %all be treat$ 9 ! same mann] z a  
refund due f a cr$it provision ref]r$ to
 9 subsection 7b77#b7 ( su* section4    
7#g7 ,recapture ,9 ! case ( any taxpay] 
:o has made an election describ$ 9      
p>agraph 7#a7 ) respect to ! pur*ase ( a
 pr9cipal resid5ce & receiv$ a paym5t   
describ$ 9 p>agraph 7#b77;,c7 f an      
eligible entity1 su* pr9cipal resid5ce  
%all be treat$ z a pr9cipal resid5ce )  
respect to :i* a cr$it 0 all[$ "u       
subsection 7a7 = purposes ( subsection  
7f74  4  7b7 ,c]ta9 errors ) respect to 
fir/-"t homebuy] tax cr$it treat$ z     
ma!matical or cl]ical errors ,p>agraph  
7#b7 ( section #fbac7;g7 ( ! ,int]nal   

,rev5ue ,code ( #aihf is am5d$ by /rik+ 
& at ! end ( subp>agraph 7,u71 by /rik+ 
! p]iod at ! end ( subp>agraph 7,v7 &   
ins]t+ 1 &1 & by ins]t+ aft] subp>agraph
 7,v7 ! foll[+ new subp>agraph3  7,w7 an
 entry on a return claim+ ! cr$it "u    
section #cf if-- 7i7 ! ,secret>y obta9s 
in=mation f ! p]son issu+ ! ,,t9 ( !    
taxpay] t indicates t ! taxpay] does n  
meet ! age requirem5t ( section         
#cf7;b77#d71  7ii7 in=mation provid$ to 
! ,secret>y by ! taxpay] on an income   
tax return = at lea/ "o ( ! #b prec$+   
taxable ye>s is inconsi/5t ) eligibility
 = su* cr$it1 or  7iii7 ! taxpay] fails 
to atta* to ! return ! =m describ$ 9    
section #cf7;d77#c74  4  7c7 ,effective 
date ,! am5dm5ts made by ?is section    
%all apply ) respect to pr9cipal        
resid5ces pur*as$ aft] ! date ( !       
enactm5t ( ?is ,act4