Bipartisan American Homeownership Opportunity Act of 2025
This bill provides a new refundable tax credit for first-time homebuyers and a new tax credit to home builders for the construction of starter homes, both subject to limitations.
First-time homebuyers may claim a tax credit equal to the amount of the down payment up to $50,000, subject to income limitations. The tax credit begins to phase out when a homebuyer’s income exceeds $300,000 for joint filers or surviving spouses, $225,000 for head of household filers, and $150,000 for single filers. The amounts are adjusted annually for inflation after 2025.
The bill requires homebuyers to add the amount received as a tax credit to taxable income if, within five years from the purchase, the house is sold, leased, or is no longer used as the principal place of residence. (Some exceptions apply.)
The bill also provides a tax credit for home builders of up to 15% of construction costs (materials and labor) incurred to build a home that is no larger than 1,200 square feet and is sold for an amount that does not exceed 80% of the median home prices for the area. The amount of the tax credit increases to 30% if the home is sold to a first-time home buyer.
Finally, under the bill, each state receives an annual allocation for the tax credit for the construction of starter homes, for allocation by the state’s housing finance agency to builders (similar to the administration of the low-income housing tax credit).
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3475 Introduced in House (IH)]
<DOC>
119th CONGRESS
1st Session
H. R. 3475
To amend the Internal Revenue Code of 1986 to establish a new first-
time homebuyer credit and to establish the starter home construction
credit.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
May 17, 2025
Mr. Fitzpatrick (for himself and Mr. Golden of Maine) 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 establish a new first-
time homebuyer credit and to establish the starter home construction
credit.
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`` Bipartisan American Homeownership
Opportunity Act of 2025''.
SEC. 2. FIRST-TIME HOMEBUYER CREDIT.
(a) In General.--Section 36 of the Internal Revenue Code of 1986 is
amended to read as follows:
``SEC. 36. FIRST-TIME HOMEBUYER CREDIT.
``(a) In General.--ln the case of an individual who is a first-time
homebuyer of a principal residence in the United States during a
taxable year, there shall be allowed as a credit against the tax
imposed by this subtitle for such taxable year an amount equal to so
much of the amount of the down payment paid by such taxpayer to
purchase such principal residence as does not exceed $50,000.
``(b) Limitation.--
``(1) In general.--The amount allowable as a credit under
subsection (a) (determined without regard to this paragraph)
for the taxable year shall be reduced (but not below zero) by
the amount which bears the same ratio to the amount which is so
allowable as--
``(A) the excess (if any) of--
``(i) the taxpayer's modified adjusted
gross income for the preceding taxable year,
over
``(ii) the applicable threshold amount,
bears to--
``(B) $100,000.--
``(2) Threshold amount.--For purposes of this subsection,
the term `threshold amount' means--
``(A) $300,000 in the case of a joint return or
surviving spouse,
``(B) $225,000 in the case of a head of household,
or
``(C) $150,000 in the case of any other individual.
``(3) Modified adjusted gross income.--For purposes of
paragraph (1), 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.
``(c) Exceptions.--No credit under subsection (a) shall be allowed
to any taxpayer for any taxable year with respect to the purchase of a
residence if--
``(1) the taxpayer is a nonresident alien,
``(2) the taxpayer disposes of such residence (or such
residence ceases to be the principal residence of the taxpayer
(and, if married, the taxpayer's spouse)) before the close of
such taxable year,
``(3) a deduction under section 151 with respect to such
taxpayer is allowable to another taxpayer for such taxable
year, or
``(4) the taxpayer fails to attach to the return of tax for
such taxable year a properly executed copy of the settlement
statement used to complete such purchase.
``(d) Election for Advanced Payment.--
``(1) In general.--At the election of the first-time
homebuyer, the Secretary shall transfer to a qualifying escrow
account an amount equal to the amount that is allowable to such
first-time homebuyer under subsection (a) in the present
taxable year.
``(2) Treatment of transfer.--The amount of the credit
allowed under subsection (a) to any taxpayer for any taxable
year shall be reduced (but not below zero) by the aggregate
amount of payments made under this subsection at the election
of such taxpayer during such taxable year. Any failure to so
reduce the credit shall be treated as arising out of a
mathematical or clerical error and assessed according to
section 6213(b)(1).
``(3) Qualifying escrow account.--For purposes of this
subsection, the term `qualifying escrow account' means an
escrow account established for the purchase of a principal
residence by a qualified first-time homebuyer that meets the
following requirements:
``(A) Amounts in such account may only be used for
a down payment on a purchase with respect to which a
credit is allowed under subsection (a).
``(B) Such account is administered by a bank (as
defined in section 408A (n)).
``(C) The administrator of the account shall
transfer to the Secretary any amount in such account
not used under subparagraph (A) on the earlier of--
``(i) the date that is 180 days after the
date on which such amount was transferred to
such account under paragraph (1), or
``(ii) as soon as practicable upon request
of the qualified first-time homebuyer.
``(e) Recapture of Credit.--
``(1) In general.--lf, during any taxable year, there is a
recapture event with respect to any property with respect to
which a credit was allowed under subsection (a), then the tax
of the taxpayer to whom such credit was allowed under this
chapter for such taxable year shall be increased by an amount
equal to the amount of the credit that was allowed with respect
to such property.
``(2) Recapture event.--For purposes of this section, the
term `recapture event' means, during the 5-year period
beginning on the date of the purchase with respect to which a
credit was allowed under subsection (a)--
``(A) the sale, lease to a third party, or
disposition of any part of the property with respect to
which such credit was allowed, or
``(B) such property ceases to be the principal
residence of the taxpayer (or, in the case of a joint
return, of the taxpayer's spouse).
``(3) Exceptions.--Paragraph (1) shall not apply to any of
the following:
``(A) Purchase of new primary residence.--
``(i) In general.--A sale of a property
with respect to which a credit was allowed
under subsection (a) which is incident to the
purchase by a taxpayer of a new primary
residence if the proceeds of such sale are used
to carry out the purchase of such new primary
residence.
``(ii) Treatment of new primary
residence.--ln the case of a purchase of a
primary residence described in clause (i), for
purposes of paragraph (1), such primary
residence shall be treated as a property with
respect to which a credit was allowed under
subsection (a), except that the period
described in paragraph (2) shall begin on the
date on which the original purchase with
respect to which the credit was allowed under
subsection (a) occurred.
``(B) Death.--Any taxable year ending after the
death of the taxpayer (or, in the case of a joint
return, of the spouse of the taxpayer).
``(C) Divorce.--A transfer of a residence to which
section 1041(a) applies.
``(D) Government orders.--A recapture event
relating to a principal residence occurring in
connection with Government orders received by such
individual, or such individual's spouse, for qualified
official extended duty service.
``(E) Qualified official extended duty service.--
For purposes of this paragraph, the term `qualified
official extended duty service' means service on
qualified official extended duty as--
``(i) a member of the uniformed services,
``(ii) a member of the Foreign Service of
the United States, or
``(iii) an employee of the intelligence
community.
``(f) Definitions.--For purposes of this section--
``(1) First-time homebuyer.--The term `first-time
homebuyer' means any individual if such individual (and if
married, such individual's spouse)--
``(A) had no present ownership interest in a
principal residence during the 10-year period ending on
the date of the purchase of the principal residence to
which this section applies,
``(B) has not been allowed a credit under
subsection (a) for any preceding taxable year, and
``(C) attests that such individual (and if married,
such individual's spouse) has never had a majority
interest in a residential property.
``(2) Principal residence.--The term `principal residence'
has the same meaning as when used in section 121.
``(3) Purchase.--
``(A) In general.--The term `purchase' means any
acquisition, but only if--
``(i) the property is purchased using a
mortgage loan from a commercial lender,
``(ii) the property is not acquired from a
person related to the person acquiring such
property (or, if married, such individual's
spouse), and
``(iii) the basis of the property in the
hands of the person acquiring such property 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).
``(B) Construction.--A residence which is
constructed by the taxpayer shall be treated as
purchased by the taxpayer on the date the taxpayer
first occupies such residence.
``(4) Related persons.--A person shall be treated as
related to another person if the relationship between such
persons 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)(4) shall be treated as providing that the family of an
individual shall include only his spouse, ancestors, and lineal
descendants).
``(g) Basis Adjustment.--For purposes of this subtitle, if a credit
is allowed under this section in connection with any expenditure for
any property, the increase in the basis of such property which would
(but for this subsection) result from such expenditure shall be reduced
by the amount of the credit so determined.
``(h) Inflation Adjustment.--
``(1) In general.--In the case of any taxable year
beginning after 2025, the dollar amounts in this section shall
be increased by an amount equal to--
``(A) such dollar amount, multiplied by
``(B) the cost-of-living adjustment determined
under section 1(f)(3) for the calendar year in which
the taxable year begins, determined by substituting
``calendar year 2023'' for calendar year 2016 in
subparagraph (A)(ii).
``(2) Rounding.--lf any increase under paragraph (1) is not
a multiple of $100, such increase shall be rounded to the
nearest multiple of $100.
``(i) Reporting.--
``(1) In general.--lf the Secretary requires information
reporting under section 6045 by a person described in
subsection (d)(2) thereof to verify the eligibility of
taxpayers for the credit allowable by this section, the
exception provided by section 6045(e) shall not apply.
``(2) Information from lender.--The Secretary may require
any lender issuing a loan for the purchase of a property with
respect to which a credit is allowed under subsection (a) or
with respect to which a first-time homebuyer has made a request
for a transfer under subsection (d)(1) to provide such
information relating to the related purchase as the Secretary
determines appropriate.
``(j) Regulations.--The Secretary shall issue such regulations or
other guidance as may be necessary or appropriate to carry out the
purposes of this section.''.
(b) Effective Date.--The amendment made by this section shall apply
to residences purchased in taxable years beginning after the date of
the enactment of this Act.
SEC. 3. STARTER HOME CONSTRUCTION CREDIT.
(a) In General.--Subpart D of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 is amended by adding at the end
the following new section:
``SEC. 45U. STARTER HOME CONSTRUCTION CREDIT.
``(a) In General.--For the purposes of section 38, the starter home
construction credit determined under this section for any taxable year
is an amount equal to 15 percent of the qualified home construction
costs of the taxpayer for the taxable year.
``(b) Limitation.--The amount allowable as a credit under
subsection (a) to any taxpayer for any taxable year shall not exceed
the amount allocated to such taxpayer for the calendar year in which
such taxable year ends under subsection (d).
``(c) Increase for First-Time Homebuyer.--ln the case of a unit of
housing sold to a first-time homebuyer (as defined in section
36(g)(1)), subsection (a) shall be applied by substituting `30 percent'
for `15 percent'.
``(d) Qualified Home Construction Costs.--For purposes of this
section, the term `qualified home construction costs' means, with
respect to a taxable year, amounts paid or incurred by the taxpayer for
labor and material costs to construct a unit of housing placed in
service during such taxable year--
``(1) the total square footage of which does not exceed
1200 feet, and
``(2) the sale price of which does not exceed 80 percent of
the area median home price.
``(e) Allocation.--
``(1) In general.--The aggregate starter home construction
credit dollar amount which a housing credit agency may allocate
for any calendar year is the portion of the State starter home
construction credit ceiling allocated under this paragraph for
such calendar year to such agency.
``(2) State ceiling initially allocated to state housing
credit agencies.--The State starter home construction credit
ceiling for each calendar year shall be allocated to the
housing credit agency of such State. If there is more than 1
housing credit agency of a State, all such agencies shall be
treated as a single agency.
``(3) State starter home credit ceiling.--The State starter
home credit ceiling applicable to any State for any calendar
year shall be an amount equal to the sum of--
``(A) the unused State housing credit ceiling (if
any) of such State for the preceding calendar year,
plus
``(B) $30 multiplied by the population of the State
(determined in accordance with section 146(j)).
``(4) Housing credit agency.--For purposes of this
subsection, the term `housing credit agency' has the meaning
given in section 42(h)(8)(A).
``(5) Inflation adjustment.--
``(A) In general.--ln the case of any taxable year
beginning after 2025, the dollar amount in paragraph
(3)(B) 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 the
calendar year in which the taxable year begins,
determined by substituting `calendar year 2023'
for `calendar year 2016' in subparagraph
(A)(ii) thereof.
``(B) Rounding.--lf any increase under subparagraph
(A) is not a multiple of $5, such increase shall be
rounded to the nearest multiple of $5.
``(f) Basis Adjustment.--For purposes of this subtitle, if a credit
is allowed under this section in connection with any expenditure for
any property, the increase in the basis of such property which would
(but for this subsection) result from such expenditure shall be reduced
by the amount of the credit so determined.
``(g) Regulations.--The Secretary shall issue such regulations or
other guidance as may be necessary or appropriate to carry out the
purposes of this section.''.
(b) Credit To Be Part of General Business Credit.--Section 38(b) of
such Code is amended by striking ``plus'' at the end of paragraph (32),
by striking the period at the end of paragraph (33) and inserting ``,
plus'', and by adding at the end the following new paragraph:
``(34) the starter home construction credit determined
under section 45U(a).''.
(c) Clerical Amendment.--The table of sections for subpart D of
part IV of subchapter A of chapter 1 of such Code is amended by
inserting after the item relating to section 45T the following new
item:
``Sec. 45U. Starter home construction credit.''.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this section.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
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