text: 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.
target: 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.
feat_title: To amend the Internal Revenue Code of 1986 to allow a refundable credit against income tax for the purchase of real property by a first-time purchaser.