AB 1736, as introduced, Steinorth. Personal income taxes: deduction: individual homeownership savings accounts.
The Personal Income Tax Law, in modified conformity with federal income tax laws allows various exclusions from gross income, and allows various deductions in computing the income that is subject to the taxes imposed by that law, including miscellaneous itemized deductions that are allowed only to the extent that the aggregate amount of those deductions exceed 2% of adjusted gross income.
This bill, on and after January 1, 2017, would allow a deduction, not to exceed specified amounts, of the amount contributed in any taxable year to an individual homeownership savings account, and, would exclude from gross income any income earned on the moneys contributed to an individual homeownership savings account. The bill would provide that a qualified taxpayer may withdraw amounts from an individual homeownership savings account to pay for qualified individual homeownership savings expenses, as defined, and would provide that any amount withdrawn from that account that is not used for these expenses would be included as income for that taxpayer. The bill would define various terms for its purposes.
This bill would take effect immediately as a tax levy.
Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.
The people of the State of California do enact as follows:
Section 17141.5 is added to the Revenue and
2Taxation Code, to read:
For each taxable year beginning on or after January
41, 2017, gross income does not include, under the same conditions
5as provided in Section 408 of the Internal Revenue Code, relating
6to individual retirement accounts, any income accruing during the
7taxable year to an individual homeownership savings account as
8defined in Section 17204.5.
Section 17204.5 is added to the Revenue and Taxation
10Code, to read:
(a) For each taxable year beginning on or after
12January 1, 2017, there shall be allowed as a deduction an amount
13equal to the amount contributed by a qualified taxpayer during the
14taxable year to an individual homeownership savings account, not
15to exceed the amounts specified in subdivision (b).
16(b) The deduction allowed under subdivision (a) shall not exceed
17the following amounts:
18(1) Twenty thousand dollars ($20,000) for a qualified taxpayer
19who is married filing a joint return, head of household, and
20surviving spouses, as defined in Section 17046.
21(2) Ten thousand dollars ($10,000) in the case of a qualified
22
taxpayer filing a return other than as described in paragraph (1).
23(c) Any amount withdrawn from an individual homeownership
24savings account shall be included in the income of the payee or
25distributee for the taxable year in which the payment or distribution
26is made, unless the payment or distribution is used to pay for the
27individual homeownership savings expenses of a qualified taxpayer
28who established the account.
29(d) For purposes of this section:
30(1) “Individual homeownership savings account” means a trust
31that meets all of the following requirements:
32(A) Is designated as an individual homeownership savings
33account by the trustee.
P3 1(B) Is established for the exclusive benefit of any
qualified
2taxpayer establishing the account where the written governing
3instrument creating the account provides for the following:
4(i) All contributions to the account are required to be in cash.
5(ii) The account is established to pay, pursuant to the
6requirements and limitations of this section, for the qualified
7individual homeownership savings expenses of a qualified taxpayer
8establishing the account.
9(C) Is, except as otherwise required or authorized by this section,
10subject to the same requirements and limitations as an individual
11retirement account established under Section 408 of the Internal
12Revenue Code, and any regulations adopted thereunder.
13(D) Is the only individual homeownership savings account
14established by the qualified taxpayer.
15(2) “Qualified individual homeownership development
16expenses” means expenses, including a down payment or mortgage
17payment, paid or incurred in connection with the purchase of a
18qualified taxpayer’s principal residence in California for use by
19that taxpayer who established the individual homeownership
20savings account.
21(3) “Qualified taxpayer” means any individual, or individual’s
22spouse, who had no present ownership interest in a principal
23residence during the preceeding three-year period ending on the
24date of the purchase of the principal residence subject to the
25contribution allowed by this section.
26(4) “Trustee” shall have the same meaning as those terms have
27under Section 408 of the Internal Revenue Code, and any
28regulations adopted thereunder.
This act provides for a tax levy within the meaning of
30Article IV of the Constitution and shall go into immediate effect.
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