Rural Housing Tax Credit Act of 2005 - Amends the Internal Revenue Code to allow a nonrefundable tax credit (the lesser of ten percent of the purchase price or $5,000) for the purchase of a principal residence in a rural area by a first-time homebuyer. Limits the amount of such credit based on taxpayer modified adjusted gross income.
Requires the recapture of credit amounts if a taxpayer fails to use a residence for which a tax credit is allowed as a principal residence or sells such residence within five years of purchase.
[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 883 Introduced in House (IH)]
109th CONGRESS
1st Session
H. R. 883
To amend the Internal Revenue Code of 1986 to allow a first time
homebuyer credit for the purchase of principal residences located in
rural areas.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
February 17, 2005
Mr. Davis of Alabama (for himself, Mr. Leach, Mr. Rogers of Alabama,
Mr. Hinojosa, Mr. Sanders, Mr. Paul, Mr. McHugh, and Mr. Conyers)
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 a first time
homebuyer credit for the purchase of principal residences located in
rural areas.
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 ``Rural Housing Tax Credit Act of
2005''.
SEC. 2. CREDIT FOR PURCHASE OF PRINCIPAL RESIDENCES BY FIRST-TIME RURAL
HOMEBUYERS.
(a) In General.--Subpart A of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 (relating to nonrefundable
personal credits) is amended by inserting after section 25B the
following:
``SEC. 25C. PURCHASE OF PRINCIPAL RESIDENCES BY FIRST-TIME RURAL
HOMEBUYERS.
``(a) Allowance of Credit.--In the case of an individual who is a
first-time homebuyer of a principal residence in a rural area during
any taxable year, there shall be allowed as a credit against the tax
imposed by this chapter for the taxable year an amount equal to the
lesser of--
``(1) 10 percent of the purchase price of the residence, or
``(2) $5,000.
``(b) Limitations.--
``(1) Limitation based on adjusted gross income.--
``(A) In general.--The amount allowed as a credit
under subsection (a) for any taxable year shall be
reduced (but not below zero) by the amount which bears
the same ratio to such amount as--
``(i) the excess of--
``(I) the taxpayer's modified
adjusted gross income for such taxable
year, over
``(II) $30,000 ($60,000 in the case
of a joint return), bears to
``(ii) $10,000 ($20,000 in the case of a
joint return).
``(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.
``(2) Limitation based on amount of tax.--The credit
allowed under subsection (a) for any taxable year shall not
exceed the excess of--
``(A) the sum of the regular tax liability (as
defined in section 26(b)) plus the tax imposed by
section 55, over
``(B) the sum of the credits allowable under this
subpart (other than this section) and section 27 for
the taxable year.
``(3) Married individuals filing jointly.--In the case of a
husband and wife who file a joint return, the credit under this
section is allowable only if the residence is a qualified
residence with respect to both the husband and wife, and the
amount specified under subsection (a)(2) shall apply to the
joint return.
``(4) Married individuals filing separately.--In the case
of a married individual filing a separate return, subsection
(a)(2) shall be applied by substituting `$2,500' for `$5,000'.
``(5) Other taxpayers.--If 2 or more individuals who are
not married purchase a qualified residence, 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 $5,000.
``(c) Definitions.--For purposes of this section--
``(1) Rural area.--The term `rural area' has the meaning
given such term by section 520 of the Housing Act of 1949.
``(2) First-time homebuyer.--The term `first-time
homebuyer' has the meaning given such term by section
72(t)(8)(D)(i).
``(3) Principal residence.--The term `principal residence'
has the same meaning as when used in section 121.
``(4) Purchase and purchase price.--The terms `purchase'
and `purchase price' have the meanings provided by section
1400C(e).
``(d) Carryforward of Unused Credit.--If the credit allowable under
subsection (a) for any taxable year exceeds the limitation imposed by
subsection (b)(2) for such taxable year reduced by the sum of the
credits allowable under this subpart (other than this section), such
excess shall be carried to the succeeding taxable year and added to the
credit allowable under subsection (a) for such taxable year.
``(e) 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.
``(f) Recapture of Credit in Case of Certain Sales.--
``(1) In general.--Except as provided in paragraph (5), if
the taxpayer--
``(A) fails to use a qualified residence as the
principal residence of the taxpayer, or
``(B) disposes of a qualified residence,
with respect to the purchase of which a credit was allowed
under subsection (a) at any time within 5 years after the date
the taxpayer acquired the property, then the tax imposed under
this chapter for the taxable year in which the disposition
occurs is increased by the credit recapture amount.
``(2) Credit recapture amount.--For purposes of paragraph
(1), the credit recapture amount is an amount equal to the sum
of--
``(A) the applicable recapture percentage of the
amount of the credit allowed to the taxpayer under this
section, plus
``(B) interest at the overpayment rate established
under section 6621 on the amount determined under
subparagraph (A) for each prior taxable year for the
period beginning on the due date for filing the return
for the prior taxable year involved.
No deduction shall be allowed under this chapter for interest
described in subparagraph (B).
``(3) Applicable recapture percentage.--
``(A) In general.--For purposes of this subsection,
the applicable recapture percentage shall be determined
from the following table:
The applicable
recapture
``If the sale occurs in:
percentage is:
Year 1............................... 100
Year 2............................... 80
Year 3............................... 60
Year 4............................... 40
Year 5............................... 20
Years 6 and thereafter............... 0.
``(B) Years.--For purposes of subparagraph (A),
year 1 shall begin on the first day of the taxable year
in which the purchase of the qualified residence
described in subsection (a) occurs.
``(4) No credits against tax.--Any increase in tax under
this subsection shall not be treated as a tax imposed by this
chapter for purposes of determining the amount of any credit
under this chapter or for purposes of section 55.
``(5) Death of owner; casualty loss; involuntary
conversion; etc.--The provisions of paragraph (1) do not apply
to--
``(A) a disposition of a qualified residence made
on account of the death of any individual having a
legal or equitable interest therein occurring during
the 5-year period to which reference is made under
paragraph (1),
``(B) a disposition of the old qualified residence
if it is substantially or completely destroyed by a
casualty described in section 165(c)(3) or compulsorily
or involuntarily converted (within the meaning of
section 1033(a)), or
``(C) a disposition pursuant to a settlement in a
divorce or legal separation proceeding where the
qualified residence is sold or the other spouse retains
such residence.
``(g) 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.''.
(b) Conforming Amendments.--
(1) Subsection (a) of section 1016 of such Code (relating
to general rule for adjustments to basis) is amended by
striking ``and'' at the end of paragraph (30), by striking the
period at the end of paragraph (31) and inserting ``, and'',
and by adding at the end the following new paragraph:
``(32) in the case of a residence with respect to which a
credit was allowed under section 25C, to the extent provided in
section 25C(g).''.
(2) Section 23(b)(4)(B) of such Code is amended by
inserting ``and section 25C'' after ``this section''.
(3) Section 24(b)(3)(B) of such Code is amended by striking
``23 and 25B'' and inserting ``23, 25B, and 25C''.
(4) Section 25(e)(1)(C) of such Code is amended by
inserting ``25C'' after ``25B''.
(5) Section 25B of such Code is amended by striking
``section 23'' and inserting ``sections 23 and 25C''.
(6) Section 26(a)(1) of such Code is amended by striking
``and 25B'' and inserting ``25B, and 25C''.
(7) Section 904(i) of such Code is amended by striking
``and 25B'' and inserting ``25B, and 25C''.
(8) Section 1400C(d) of such Code is amended by striking
``and 25B'' and inserting ``25B, and 25C''.
(9) The table of sections for subpart A of part IV of
subchapter A of chapter 1 of such Code is amended by inserting
before the item relating to section 26 the following:
``Sec. 25C. Purchase of principal residences by first-time rural
homebuyers.''.
(c) Effective Dates.--
(1) In general.--The amendments made by subsections (a) and
(b)(9) shall apply to purchases after the date of the enactment
of this Act, in taxable years ending after such date.
(2) Subsection (b).--
(A) The amendments made by subsection (b) (other
than paragraph (9) thereof) shall apply to taxable
years beginning after December 31, 2005.
(B) In the case of taxable years beginning before
January 1, 2006, for purposes of applying the
provisions of subpart A of part IV of subchapter A of
chapter 1 of such Code relating to limitations based on
amount of tax and carryovers of credit and of section
904(i)--
(i) section 25C(b)(2) of such Code, as
added by subsection (a), shall not apply, and
(ii) section 25C of such Code (as so added)
shall be stacked after section 23 of such Code.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
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