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