[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 2402 Introduced in Senate (IS)]
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119th CONGRESS
1st Session
S. 2402
To amend the Internal Revenue Code of 1986 to provide for a first-time
homebuyer credit, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
July 23, 2025
Mr. Whitehouse (for himself, Mr. Heinrich, Mr. Welch, Ms. Smith, Mr.
Reed, Ms. Baldwin, Ms. Rosen, Mr. Blumenthal, Mr. Van Hollen, Ms. Blunt
Rochester, Mr. Kim, Mr. Gallego, and Ms. Alsobrooks) introduced the
following bill; which was read twice and referred to the Committee on
Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to provide for a first-time
homebuyer credit, and for other purposes.
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 ``First-Time Homebuyer Tax Credit Act
of 2025''.
SEC. 2. FIRST-TIME HOMEBUYER REFUNDABLE TAX 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) Allowance of Credit.--In 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
10 percent of the purchase price of the residence.
``(b) Limitations.--
``(1) Dollar limitation.--
``(A) In general.--Except as otherwise provided in
this paragraph, the credit allowed under subsection (a)
shall not exceed $15,000.
``(B) Married individuals filing separately.--In
the case of a married individual filing a separate
return, subparagraph (A) shall be applied by
substituting `$7,500' for `$15,000'.
``(C) Other individuals.--If 2 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 $15,000.
``(2) Phaseout based on area median income.--
``(A) In general.--The amount allowable as a credit
under subsection (a) (determined without regard to this
paragraph) shall be reduced (but not below zero) by the
amount which bears the same ratio to the amount which
is so allowable as--
``(i) the excess (if any) of--
``(I) the modified adjusted gross
income of the taxpayer for the taxable
year, over
``(II) 150 percent of the
applicable Area Medium Income, bears to
``(ii) 20 percent of the applicable Area
Median Income.
``(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.
``(C) Applicable area median income.--For purposes
of subparagraph (A), the term `applicable Area Median
Income' means the Area Median Income set by the
Secretary of Housing and Urban Development with respect
to--
``(i) the area in which the principal
residence is located,
``(ii) the size of the household of the
taxpayer, and
``(iii) the calendar year in which the
principal residence is purchased.
``(D) Regulations and guidance.--The Secretary,
after consultation with the Secretary of Housing and
Urban Development, shall issue such regulations and
guidance as are necessary to carry out the purposes of
this subparagraph.
``(3) Limitation based on area median purchase price.--
``(A) In general.--The amount allowable as a credit
under subsection (a) (determined without regard to this
paragraph) shall be reduced (but not below zero) by the
amount which bears the same ratio to the amount which
is so allowable as--
``(i) the excess (if any) of--
``(I) the purchase price of the
principal residence, over
``(II) the amount which is equal to
110 percent of the area median purchase
price, bears to
``(ii) the amount which is equal to 15
percent of the area median purchase price.
``(B) Area median purchase price.--For purposes of
this paragraph, the term `area median purchase price'
means the median purchase price for a home in both the
area and the calendar year in which the purchase of the
principal residence takes place.
``(C) Regulations and guidance.--The Secretary,
after consultation with the Secretary of Housing and
Urban Development, shall promulgate such regulations
and guidance as are necessary to carry out the purposes
of this subparagraph, including for determining the
area median purchase price with respect to different
localities.
``(4) Inflation adjustment.--In the case of any taxable
year beginning in a calendar year after 2025, each of the
dollar amounts in paragraph (1) 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 2024' for `calendar year 2016' in
subparagraph (A)(ii) thereof.
Any increase determined under the preceding sentence shall be
rounded to the nearest multiple of $100.
``(5) Age limitation.--No credit shall be allowed under
subsection (a) with respect to the purchase of any residence
unless the taxpayer has attained age 18 as of the date of such
purchase. In the case of any taxpayer who is married (within
the meaning of section 7703), the taxpayer shall be treated as
meeting the age requirement of the preceding sentence if the
taxpayer or the taxpayer's spouse meets such age requirement.
``(c) 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) has no present ownership interest in any
residence during the 3-year period ending on the date
of the purchase of the principal residence to which
this section applies, and
``(B) has not taken the credit under this section
in any other taxable year.
``(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 not acquired from a
person related to the person acquiring such
property (or, if married, such individual's
spouse),
``(ii) the acquisition is financed through
a federally backed mortgage loan (as defined in
section 4022 of the CARES Act), 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)
(relating to property acquired from a
decedent).
``(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) Purchase price.--The term `purchase price' means the
adjusted basis of the principal residence on the date such
residence is purchased.
``(5) 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).
``(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) 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,
``(2) a deduction under section 151 with respect to such
taxpayer is allowable to another taxpayer for such taxable
year, or
``(3) 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) 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.--
``(1) In general.--Except as otherwise provided in this
subsection, if, during any taxable year before the close of the
recapture period, a taxpayer disposes of the principal
residence with respect to which a credit was allowed under
subsection (a) (or such residence ceases to be the principal
residence of the taxpayer), the tax imposed by this chapter for
such taxable year shall be increased by the recoverable amount
determined in paragraph (2).
``(2) Recoverable amount.--For purposes of paragraph (1),
the recoverable amount is the product of--
``(A) 25 percent of the amount of the credit
allowed under subsection (a), multiplied by
``(B) the number of taxable years remaining in the
recapture period as of the beginning of the taxable
year in which the taxpayer disposes of the principal
residence.
``(3) Limitation based on gain.--In the case of the sale of
the principal residence to a person who is not related to the
taxpayer, the increase in tax determined under paragraph (1)
shall not exceed the amount of gain (if any) on such sale.
Solely for purposes of the preceding sentence, the adjusted
basis of such residence shall be reduced by the amount of the
credit allowed under subsection (a).
``(4) Exceptions.--
``(A) Death of a taxpayer.--Paragraph (1) shall not
apply to any taxable year ending after the date of the
taxpayer's death.
``(B) Involuntary conversion.--Paragraph (1) shall
not apply in the case of a residence which is
compulsorily or involuntarily converted (within the
meaning of section 1033(a)) if the taxpayer acquires a
new principal residence during the 2-year period
beginning on the date of the disposition or cessation
referred to in paragraph (1). Paragraph (1) shall apply
to such new principal residence during the recapture
period in the same manner as if such new principal
residence were the converted residence.
``(C) Transfers between spouses or incident to
divorce.--In the case of a transfer of a residence to
which section 1041(a) applies--
``(i) paragraph (1) shall not apply to such
transfer, and
``(ii) in the case of taxable years ending
after such transfer, paragraph (1) shall apply
to the transferee in the same manner as if such
transferee were the transferor (and shall not
apply to the transferor).
``(D) Special rule for members of the armed forces,
etc.--
``(i) In general.--In the case of the
disposition of a principal residence by an
individual (or a cessation referred to in
paragraph (1)) after December 31, 2022, in
connection with Government orders received by
such individual, or such individual's spouse,
for qualified official extended duty service,
paragraph (1) and subsection (d)(2) shall not
apply to such disposition (or cessation).
``(ii) Qualified official extended duty
service.--For purposes of this section, 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.
``(iii) Definitions.--Any term used in this
subparagraph which is also used in paragraph
(9) of section 121(d) shall have the same
meaning as when used in such paragraph.
``(E) Disposition of residence in connection with
change of employment.--In the case of the disposition
of a principal residence by an individual (or a
cessation referred to in paragraph (1)) after December
31, 2022, in connection with a change of employment
which meets the conditions described in section 217(c),
paragraph (1) shall not apply to such disposition (or
cessation).
``(5) Joint returns.--In the case of a credit allowed under
subsection (a) with respect to a joint return, half of such
credit shall be treated as having been allowed to each
individual filing such return for purposes of this subsection.
``(6) Return requirement.--If the tax imposed by this
chapter for the taxable year is increased under this
subsection, the taxpayer shall, notwithstanding section 6012,
be required to file a return with respect to the taxes imposed
under this subtitle.
``(7) Recapture period.--For purposes of this subsection,
the term `recapture period' means the 4 taxable years beginning
with the taxable year in which the purchase of the principal
residence for which a credit is allowed under subsection (a)
was made.
``(g) Election To Treat Purchase in Prior Year.--In the case of a
purchase of a principal residence after December 31, 2023, a taxpayer
may elect to treat such purchase as made on December 31 of the calendar
year preceding such purchase for purposes of this section (other than
subsections (b)(4), (c), and (h)).
``(h) Transfer of Credit.--
``(1) In general.--Subject to such regulations and other
guidance as the Secretary determines necessary, a taxpayer may
elect that the credit which would (but for this subsection) be
allowed to such taxpayer with respect to the purchase of a
principal residence shall be allowed to the mortgage lender
with respect to such purchase and not to such taxpayer.
``(2) Eligible entity.--For purposes of this subsection,
the term `eligible entity' means, with respect to the purchase
of the principal residence for which the credit is allowed
under subsection (a), the mortgage lender which provides the
mortgage to the taxpayer and has--
``(A) registered with the Secretary for purposes of
this paragraph, at such time, and in such form and
manner, as the Secretary may prescribe,
``(B) prior to the election described in paragraph
(1) and not later than at the time of such purchase,
disclosed to the taxpayer making such purchase--
``(i) the value of the credit allowed under
subsection (a), and
``(ii) the amount provided by the mortgage
lender to such taxpayer as a condition of the
election described in paragraph (1).
``(C) not later than at the time of such purchase,
made payment to such taxpayer (whether in cash or in
the form of a partial payment or down payment for the
purchase of such principal residence) in an amount
equal to the credit otherwise allowable to such
taxpayer, and
``(D) with respect to any incentive otherwise
available for taking a mortgage for which a credit is
allowed under this section, including any incentive in
the form of a rebate or discount provided by the
mortgage lender, ensured that--
``(i) the availability or use of such
incentive shall not limit the ability of a
taxpayer to make an election described in
paragraph (1), and
``(ii) such election shall not limit the
value or use of such incentive.
``(3) Timing.--An election described in paragraph (1) shall
be made by the taxpayer not later than the date on which the
purchase of the principal residence with respect to which the
credit under subsection (a) is allowed is made.
``(4) Revocation of registration.--Upon determination by
the Secretary that a mortgage lender has failed to comply with
the requirements described in paragraph (2), the Secretary may
revoke the registration (as described in subparagraph (A) of
such paragraph) of such mortgage lender.
``(5) Tax treatment of payments.--With respect to any
payment described in paragraph (2)(C), such payment--
``(A) shall not be includible in the gross income
of the taxpayer, and
``(B) with respect to the mortgage lender, shall
not be deductible under this title.
``(6) Advance payment to mortgage lenders.--
``(A) In general.--The Secretary shall establish a
program to make advance payments to any eligible entity
in an amount equal to the cumulative amount of the
credits allowed under subsection (a) with respect to
any mortgages issued by such entity for which an
election described in paragraph (1) has been made.
``(B) Excessive payments.--Rules similar to the
rules of section 6417(d)(6) shall apply for purposes of
this paragraph.
``(C) Treatment of advance payments.--For purposes
of section 1324 of title 31, United States Code, the
payments under subparagraph (A) shall be treated in the
same manner as a refund due from a credit provision
referred to in subsection (b)(2) of such section.
``(7) Recapture.--In the case of any taxpayer who has made
an election described in paragraph (1) with respect to the
purchase of a principal residence and received a payment
described in paragraph (2)(C) from an eligible entity, such
principal residence shall be treated as a principal residence
with respect to which a credit was allowed under subsection (a)
for purposes of subsection (f).''.
(b) Certain Errors With Respect to First-Time Homebuyer Tax Credit
Treated as Mathematical or Clerical Errors.--Paragraph (2) of section
6213(g) of the Internal Revenue Code of 1986, as amended by Public Law
119-21, is amended by striking ``and'' at the end of subparagraph (Z),
by striking the period at the end of subparagraph (AA) and inserting
``, and'', and by inserting after subparagraph (AA) the following new
subparagraph:
``(BB) an entry on a return claiming the credit
under section 36 if--
``(i) the Secretary obtains information
from the person issuing the TIN of the taxpayer
that indicates that the taxpayer does not meet
the age requirement of section 36(b)(4),
``(ii) information provided to the
Secretary by the taxpayer on an income tax
return for at least one of the 2 preceding
taxable years is inconsistent with eligibility
for such credit, or
``(iii) the taxpayer fails to attach to the
return the form described in section
36(d)(3).''.
(c) Effective Date.--The amendments made by this section shall
apply with respect to principal residences purchased after the date of
the enactment of this Act.
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