(f) Recapture of credit
(1) In general
Except as otherwise provided in this subsection, if a credit under subsection (a) is allowed to a taxpayer, the tax imposed by this chapter shall be increased by 6⅔ percent of the amount of such credit for each taxable year in the recapture period.
(2) Acceleration of recapture
If 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 (and, if married, the taxpayer’s spouse)) before the end of the recapture period—
(A) the tax imposed by this chapter for the taxable year of such disposition or cessation shall be increased by the excess of the amount of the credit allowed over the amounts of tax imposed by paragraph (1) for preceding taxable years, and
(B) paragraph (1) shall not apply with respect to such credit for such taxable year or any subsequent taxable year.
(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 (2) 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) to the extent not previously recaptured under paragraph (1).
(4) Exceptions
(A) Death of taxpayer
Paragraphs (1) and (2) shall not apply to any taxable year ending after the date of the taxpayer’s death.
(B) Involuntary conversion
Paragraph (2) 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 (2). Paragraph (2) 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 (2) shall not apply to such transfer, and
(ii) in the case of taxable years ending after such transfer, paragraphs (1) and (2) shall apply to the transferee in the same manner as if such transferee were the transferor (and shall not apply to the transferor).
(D) Waiver of recapture for purchases in 2009 and 2010
In the case of any credit allowed with respect to the purchase of a principal residence after December 31, 2008—
(i) paragraph (1) shall not apply, and
(ii) paragraph (2) shall apply only if the disposition or cessation described in paragraph (2) with respect to such residence occurs during the 36-month period beginning on the date of the purchase of such residence by the taxpayer.
(E) 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 (2)) after December 31, 2008, in connection with Government orders received by such individual, or such individual’s spouse, for qualified official extended duty service—
(I) paragraph (2) and subsection (d)(2) shall not apply to such disposition (or cessation), and
(II) if such residence was acquired before January 1, 2009, paragraph (1) shall not apply to the taxable year in which such disposition (or cessation) occurs or any subsequent taxable year.
(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.
(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 15 taxable years beginning with the second taxable year following the taxable year in which the purchase of the principal residence for which a credit is allowed under subsection (a) was made.
Prior Provisions
A prior section 36 was renumbered section 37 of this title.
Another prior section 36, acts Aug. 16, 1954, ch. 736, 68A Stat. 15; Oct. 4, 1976, Pub. L. 94–455, title V, § 501(b)(2), title X, § 1011(c), title XIX, § 1901(b)(1)(A), 90 Stat. 1558, 1611, 1790, directed that credits provided by section 32 not be allowed if an individual elects under section 144 to take standard deduction, prior to repeal by Pub. L. 95–30, title I, §§ 101(d)(3), 106(a), May 23, 1977, 91 Stat. 133, 141, applicable to taxable years beginning after Dec. 31, 1976.
Amendments
2010—Subsec. (h)(2). Pub. L. 111–198, § 2(a), substituted “and who purchases such residence before October 1, 2010, paragraph (1) shall be applied by substituting ‘October 1, 2010’ ” for “paragraph (1) shall be applied by substituting ‘July 1, 2010’ ”.
Subsec. (h)(3)(B). Pub. L. 111–198, § 2(b), inserted “, and for ‘October 1, 2010’ ” after “for ‘July 1, 2010’ ”.
2009—Subsec. (b)(1)(A). Pub. L. 111–5, § 1006(b)(1), substituted “$8,000” for “$7,500”.
Subsec. (b)(1)(B). Pub. L. 111–5, § 1006(b), substituted “$4,000” for “$3,750” and “$8,000” for “$7,500”.
Subsec. (b)(1)(C). Pub. L. 111–5, § 1006(b)(1), substituted “$8,000” for “$7,500”.
Subsec. (b)(1)(D). Pub. L. 111–92, § 11(c)(1), added subpar. (D).
Subsec. (b)(2)(A)(i)(II). Pub. L. 111–92, § 11(c)(2), substituted “$125,000 ($225,000” for “$75,000 ($150,000”.
Subsec. (b)(3). Pub. L. 111–92, § 11(d), added par. (3).
Subsec. (b)(4). Pub. L. 111–92, § 12(a)(1), added par. (4).
Subsec. (c)(3)(A)(i). Pub. L. 111–92, § 12(c), inserted “(or, if married, such individual’s spouse)” after “person acquiring such property”.
Subsec. (c)(6). Pub. L. 111–92, § 11(b), added par. (6).
Subsec. (d). Pub. L. 111–5, § 1006(d)(2), (e), redesignated pars. (3) and (4) as (1) and (2), respectively, and struck out former pars. (1) and (2) which read as follows:
“(1) a credit under section 1400C (relating to first-time homebuyer in the District of Columbia) is allowable to the taxpayer (or the taxpayer’s spouse) for such taxable year or any prior taxable year,
“(2) the residence is financed by the proceeds of a qualified mortgage issue the interest on which is exempt from tax under section 103,”.
Subsec. (d)(3). Pub. L. 111–92, § 11(g), added par. (3).
Subsec. (d)(4). Pub. L. 111–92, § 12(b), added par. (4).
Subsec. (f)(4)(D). Pub. L. 111–92, § 11(a)(2), inserted “and 2010” after “2009” in heading and struck out “, and before December 1, 2009” after “December 31, 2008” in introductory provisions.
Pub. L. 111–5, § 1006(c)(1), added subpar. (D).
Subsec. (f)(4)(E). Pub. L. 111–92, § 11(e), added subpar. (E).
Subsec. (g). Pub. L. 111–92, § 12(a)(2), inserted “(b)(4),” before “(c)”.
Pub. L. 111–92, § 11(a)(3), amended subsec. (g) generally. Prior to amendment, text read as follows: “In the case of a purchase of a principal residence after December 31, 2008, and before December 1, 2009, a taxpayer may elect to treat such purchase as made on December 31, 2008, for purposes of this section (other than subsections (c) and (f)(4)(D)).”
Pub. L. 111–5, § 1006(a)(2), (c)(2), substituted “December 1, 2009” for “July 1, 2009” and “subsections (c) and (f)(4)(D)” for “subsection (c)”.
Subsec. (h). Pub. L. 111–92, § 11(a)(1), substituted “May 1, 2010” for “December 1, 2009”, designated existing provisions as par. (1), inserted heading, and added par. (2).
Pub. L. 111–5, § 1006(a)(1), substituted “December 1, 2009” for “July 1, 2009”.
Subsec. (h)(3). Pub. L. 111–92, § 11(f), added par. (3).
Effective Date of 2010 Amendment
Pub. L. 111–198, § 2(c), July 2, 2010, 124 Stat. 1356, provided that:
“The amendments made by this section [amending this section] shall apply to residences purchased after June 30, 2010.”
Effective Date of 2009 Amendment
Pub. L. 111–92, § 11(j)(1)–(3), Nov. 6, 2009, 123 Stat. 2991, provided that:
“(1) In general.— The amendments made by subsections (b), (c), (d), and (g) [amending this section] shall apply to residences purchased after the date of the enactment of this Act [Nov. 6, 2009].
“(2) Extensions.— The amendments made by subsections (a) [amending this section], (f) [amending this section], and (i) [amending section 1400C of this title] shall apply to residences purchased after November 30, 2009.
“(3) Waiver of recapture.— The amendment made by subsection (e) [amending this section] shall apply to dispositions and cessations after December 31, 2008.”
Pub. L. 111–92, § 12(e), Nov. 6, 2009, 123 Stat. 2992, provided that:
“(1) In general.— Except as otherwise provided in this subsection, the amendments made by this section [amending this section and section 6213 of this title] shall apply to purchases after the date of the enactment of this Act [Nov. 6, 2009].
“(2) Documentation requirement.— The amendments made by subsection (b) [amending this section] shall apply to returns for taxable years ending after the date of the enactment of this Act [Nov. 6, 2009].
“(3) Treatment as mathematical and clerical errors.— The amendments made by subsection (d) [amending section 6213 of this title] shall apply to returns for taxable years ending on or after April 9, 2008.”
Pub. L. 111–5, div. B, title I, § 1006(f), Feb. 17, 2009, 123 Stat. 317, provided that:
“The amendments made by this section [amending this section and
section 1400C of this title] shall apply to residences purchased after December 31, 2008.”
Effective Date
Section applicable to residences purchased on or after Apr. 9, 2008, in taxable years ending on or after such date, see section 3011(c) of Pub. L. 110–289, set out as an Effective Date of 2008 Amendment note under section 26 of this title.