article: SECTION 1. SHORT TITLE. This Act may be cited as the ``First Time Property Owners Tax Credit Act of 2008''. SEC. 2. REFUNDABLE CREDIT FOR FIRST-TIME PURCHASE OF REAL PROPERTY. (a) In General.--Subpart C of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to refundable credits) is amended by redesignating section 36 as section 37 and by inserting after section 35 the following new section: ``SEC. 36. FIRST-TIME PURCHASE OF REAL PROPERTY. ``(a) Allowance of Credit.--In the case of an individual who is a first-time purchaser of real property in the United States during any taxable year, there shall be allowed as a credit against the tax imposed by this subtitle for the taxable year an amount equal to 5 percent of the purchase price of such property. ``(b) Limitations.-- ``(1) Maximum dollar amount.-- ``(A) In general.--The credit allowed under subsection (a) shall not exceed the excess (if any) of $1,500 (2 times such amount in the case of a joint return). ``(B) Inflation adjustment.--In the case of any taxable year beginning after December 31, 2008, the $1,500 amount under subparagraph (A) shall be increased by an amount equal to $1,500, multiplied by the cost- of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins by substituting `2007' for `1992' in subparagraph (B) thereof. If the $1,500 amount as adjusted under the preceding sentence is not a multiple of $10, such amount shall be rounded to the nearest multiple of $10. ``(2) Taxable income limitation.-- ``(A) In general.--If the taxable income of the taxpayer for any taxable year exceeds the maximum taxable income in the table under subsection (a), (b), (c), or (d) of section 1, whichever is applicable, to which the 25 percent rate applies, the dollar amounts in effect under paragraph (1)(A) for such taxpayer for the following taxable year shall be reduced (but not below zero) by the amount of the excess. ``(B) Change in return status.--In the case of married individuals filing a joint return for any taxable year who did not file such a joint return for the preceding taxable year, subparagraph (A) shall be applied by reference to the highest taxable income of either such individual for the preceding taxable year. ``(c) Definitions and Special Rules.--For purposes of this section-- ``(1) First-time purchaser.-- ``(A) In general.--The term `first-time purchaser' means any individual if such individual (and if married, such individual's spouse) had no present ownership interest in real property during the 2-year period ending on the date of acquisition of the property to which subsection (a) applies. ``(B) One-time only.--If an individual is treated as a first-time purchaser with respect to any real property, such individual may not be treated as a first-time purchaser with respect to any other real property. ``(C) Married individuals filing jointly.--In the case of married individuals who file a joint return, the credit under this section is allowable only if both individuals are first-time purchasers. ``(D) Other taxpayers.--If 2 or more individuals who are not married purchase real property-- ``(i) the credit under this section is allowable only if each of the individuals is a first-time purchaser, and ``(ii) 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 the amount in effect under subsection (b)(1)(A) for individuals filing joint returns. ``(2) Purchase.--The term `purchase' means any acquisition, but only if-- ``(A) the property is not acquired from a person whose relationship to the person acquiring it 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) shall be treated as providing that the family of an individual shall include only the individual's spouse, ancestors, and lineal descendants), and ``(B) the basis of the property in the hands of the person acquiring it 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). ``(3) Purchase price.--The term `purchase price' means the adjusted basis of the property on the date on which a binding contract to acquire such property is entered into. ``(d) Denial of Double Benefit.--No credit shall be allowed under subsection (a) for any expense for which a deduction or credit is allowed under any other provision of this chapter. ``(e) Basis Adjustment.--For purposes of this subtitle, if a credit is allowed under this section with respect to the purchase of any property, the basis of such property shall be reduced by the amount of the credit so allowed. ``(f) Property to Which Section Applies.--The provisions of this section apply to real property if-- ``(1) the taxpayer purchases such property on or after January 1, 2008, and before January 1, 2013, or ``(2) the taxpayer enters into, on or after January 1, 2008, and before January 1, 2013, a binding contract to purchase such property before July 1, 2014.''. (b) Conforming Amendments.-- (1) Subsection (a) of section 1016 of the Internal Revenue Code of 1986 (relating to general rule for adjustments to basis) is amended by striking ``and'' at the end of paragraph (35), by striking the period at the end of paragraph (36) and inserting ``, and'', and by adding at the end the following new paragraph: ``(37) in the case of real property with respect to which a credit was allowed under section 36, to the extent provided in section 36(e).''. (2) Section 1324(b)(2) of title 31, United States Code, is amended by inserting ``or 36'' after ``section 35''. (c) Clerical Amendment.--The table of sections for subpart C of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by striking the item relating to section 36 and inserting the following new items: ``Sec. 36. First-time purchase of real property. ``Sec. 37. Overpayments of tax.''. (d) Effective Date.--The amendments made by this section shall apply to taxable years beginning after December 31, 2007.
summary: First Time Property Owners Tax Credit Act of 2008 - Amends the Internal Revenue Code to allow an income-based, one-time refundable tax credit for first-time homebuyers of 5% of the purchase price of real property located in the United States, up to a maximum credit amount of $1,500 ($3,000 for joint returns). Makes such credit applicable to purchases of property on or after January 1, 2008, and before January 1, 2013, and to binding contracts made between such dates to purchase such property before July 1, 2014.