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H.R. 3790: Residential Recovery Zone Act


The text of the bill below is as of Jul 17, 2019 (Introduced).


I

116th CONGRESS

1st Session

H. R. 3790

IN THE HOUSE OF REPRESENTATIVES

July 17, 2019

introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committee on Financial Services, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

A BILL

To amend the Internal Revenue Code of 1986 to provide for a credit against tax for homebuyers purchasing residences in residential recovery zones, and for other purposes.

1.

Short title

This Act may be cited as the Residential Recovery Zone Act.

2.

Residential recovery zone homebuyer credit

(a)

In general

Subpart A of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 25D the following new section:

25E.

Residential recovery zone homebuyer credit

(a)

Allowance of credit

(1)

In general

In the case of an individual who purchases a principal residence in a residential recovery zone 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 10 percent of the purchase price of the residence.

(2)

Timing

At the election of an individual, the credit allowed under subsection (a) for a taxable year may be allowed instead during any one on the subsequent 3 taxable years.

(b)

Limitations

(1)

Dollar limitation

(A)

In general

Except as otherwise provided in this paragraph, the credit allowed under subsection (a) shall not exceed $8,000.

(B)

Married individuals filing separately

In the case of a married individual filing a separate return, subparagraph (A) shall be applied by substituting $4,000 for $8,000.

(C)

Other individuals

If two or more individuals who are not married purchase a principal 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 $8,000.

(2)

Limitation based on purchase price

No credit shall be allowed under subsection (a) for the purchase of any residence if the purchase price of such residence exceeds $1,500,000.

(c)

Definitions

For purposes of this section—

(1)

Residential recovery zone defined

(A)

In general

The term residential recovery zone means, with respect to a Federally declared disaster, a population census tract that is—

(i)

in the disaster area related to such disaster, and

(ii)

designated under subparagraph (B).

(B)

Designation

A population census tract is designated under this paragraph with respect to a Federally declared disaster if, during the period beginning on the earliest incident date specified in the declaration to which such area relates and ending on the date that is one year after such date—

(i)

the chief executive officer of the State in which the tract is located—

(I)

nominates the tract for designation as a residential recovery zone, and

(II)

notifies the Secretary in writing of such nomination, and

(ii)

the Secretary certifies such nomination and designates such tract as a residential recovery zone.

(C)

Duration of designation

A designation under subparagraph (B) shall terminate on the date that is 3 years after the date of the certification described in subparagraph (B)(ii).

(D)

State; Federally declared disaster; disaster area

The term State has the meaning given such terms in section 1400Z–1, and Federally declared disaster and disaster area have the meaning given such terms in section 165(i).

(2)

Principal residence

The term principal residence has the same meaning as when used in section 121.

(3)

Purchase; purchase price

The term purchase and purchase price have the meanings given such terms in section 36(c).

(d)

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)

a deduction under section 151 with respect to such taxpayer is allowable to another taxpayer for such taxable year, or

(2)

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.

(e)

Recapture of credit

(1)

In general

If a residence with respect to which a credit was allowed under subsection (a) ceases to be the principal residence of the taxpayer before the end of the 3-year period beginning on the date of the purchase of such residence the tax imposed by this chapter for the taxable year of cessation shall be increased by the amount of the credit so allowed and claimed.

(2)

Exceptions

(A)

Death of taxpayer

Paragraph (1) shall not apply if the cessation is attributable to the taxpayer’s death.

(B)

Involuntary conversion

Paragraph (1) shall not apply if the cessation is attributable to a compulsorily or involuntarily conversion (within the meaning of section 1033(a)) and the taxpayer acquires a new principal residence during the 2-year period beginning on the date of such cessation.

(C)

Special rule for members of the armed forces, etc

(i)

In general

Paragraph (1) shall not apply if the cessation is attributable to Government orders received by such individual, or such individual’s spouse, for 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.

(ii)

Definitions

Any term used in this subparagraph which is also used in section 121(d)(9) shall have the same meaning as when used in such paragraph.

.

(b)

Clerical amendment

The table of sections for subpart A of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after the item relating to section 25D the following new item:

Sec. 25E. Residential recovery zone homebuyer credit.

.

(c)

Effective date

The amendments made by this section shall apply with respect to purchases in taxable years beginning after the date that is 1 year before the date of the enactment of this Act.

3.

Treatment as opportunity zones

(a)

In general

Section 1400Z–1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:

(g)

Certain disaster zones

(1)

Designation

With respect to a Federally declared disaster, the chief executive officer of a State may designate under this paragraph not more than 5 percent of the applicable disaster tracts in such State with respect to such disaster.

(2)

No effect on limitation on number of designations

An applicable disaster tract designated under paragraph (1) shall not be taken into account in determining the limitation under subsection (d).

(3)

Applicable disaster tract

The term applicable disaster tract means, with respect to a Federally declared disaster, a population census tract in the disaster area related to such disaster.

(4)

Federally declared disaster; disaster area

In this subsection, the term Federally declared disaster and the term disaster area have the meaning given such terms in section 165(i).

(5)

Applicable start date

(A)

Qualified opportunity fund businesses and property

In the case of an applicable disaster tract designated under paragraph (1), subparagraphs (B)(i)(I), (C)(i), and (D)(i)(I) of section 1400Z–2(d)(2) shall each be applied by substituting the applicable start date for December 31, 2017.

(B)

Extension of determination period

In the case of an applicable disaster tract designated under paragraph (1), section (c)(2)(B) shall be applied by substituting the applicable start date for the date of the enactment of the Tax Cuts and Jobs Act.

(C)

Applicable start date

The term applicable start date means, with respect to a disaster area, the earliest incident date specified in the declaration to which such area relates.

.

(b)

Effective date

The amendments made by this section shall apply with respect to Federally declared disasters declared after the date of the enactment of this Act.

4.

Credit under the Community Reinvestment Act of 1977 for lending in a residential recovery zone

Section 804 of the Community Reinvestment Act of 1977 (12 U.S.C. 2903) is amended by adding at the end the following:

(e)

Residential recovery zone loans

In assessing and taking into account, under subsection (a), the record of a financial institution, the appropriate Federal financial supervisory agency shall consider as a factor lending activities to individuals and businesses that are located in a residential recovery zone (as defined under section 36A(c) of the Internal Revenue Code of 1986).

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