(1) An individual taxpayer shall be allowed a credit against the taxes that are otherwise due under ORS chapter 316 if, during the tax year:
(a) The taxpayer purchased a primary residence;
(b) All or a part of the usual and reasonable settlement, financing or other closing costs for the purchase were funded from a withdrawal from an individual development account in which the taxpayer is the account holder; and
(c) An approved purpose of the account is the purpose described in ORS 458.685 (1)(d).
(2) The amount of the tax credit shall be the least of:
(a) The amount of the withdrawal from the individual development account that is for the purpose described in ORS 458.685 (1)(d);
(b) The amount of usual and reasonable settlement, financing and other closing costs incurred in the purchase of the primary residence;
(c) $2,000; or
(d) The tax liability of the taxpayer.
(3) A tax credit allowed under this section that is unused may not be carried forward to a succeeding tax year.
(4) A tax credit under this section may be claimed by a nonresident or a part-year resident without proration.
(5) The definitions in ORS 458.670 apply to this section.