Amended in Assembly March 10, 2016

California Legislature—2015–16 Regular Session

Assembly Bill No. 1736

Introduced by Assembly Member Steinorth

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(Coauthors: Assembly Members Achadjian, Travis Allen, Baker, Brough, Brown, Chang, Dahle, Beth Gaines, Gallagher, Hadley, Harper, Jones, Kim, Lackey, Low, Maienschein, Mathis, Mayes, Obernolte, Olsen, Patterson, and Waldron)

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(Coauthors: Senators Anderson, Cannella, Fuller, Glazer, Morrell, Nguyen, Runner, and Vidak)

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February 1, 2016

An act to add Sections 17141.5 and 17204.5 to the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.

LEGISLATIVE COUNSEL’S DIGEST

AB 1736, as amended, Steinorth. Personal income taxes: deduction: begin delete individual end delete 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 begin delete an individual end delete begin insert a end insert homeownership savings account, and, would exclude from gross income any income earned on the moneys contributed to begin delete an individual end delete begin insert a end insert homeownership savings account. The bill would provide that a qualified taxpayer may withdraw amounts from begin delete an individual end delete begin insert a end insert homeownership savings account to pay for qualified begin delete individual end delete homeownership savings expenses, as defined, and would provide that any amount withdrawn from that account that is not used for these expenses would be included as income for that taxpayer.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 1.  

Section 17141.5 is added to the Revenue and
Taxation Code, to read:

17141.5.  

For each taxable year beginning on or after January
1, 2017, gross income does not include, under the same conditions
as provided in Section 408 of the Internal Revenue Code, relating
to individual retirement accounts, any income accruing during the
taxable year to begin delete an individual end delete begin insert a end insert homeownership savings account
as defined in Section 17204.5.

SEC. 2.  

Section 17204.5 is added to the Revenue and Taxation
Code, to read:

17204.5.  

(a) For each taxable year beginning on or after
January 1, 2017, there shall be allowed as a deduction an amount
equal to the amount contributed by a qualified taxpayer during the
taxable year to begin delete an individual end delete begin insert a end insert homeownership savings account,
not to exceed the amounts specified in subdivision (b).

(b) The deduction allowed under subdivision (a) shall not exceed
the following amounts:

(1) Twenty thousand dollars ($20,000) for begin delete a qualified taxpayer
who is end delete begin insert qualified taxpayers who are end insert married filing a joint return,
begin insert a end insert head of household, and surviving spouses, as defined in Section
17046.

(2) Ten thousand dollars ($10,000) in the case of a qualified
taxpayer filing a return other than as described in paragraph (1).

(c) Any amount withdrawn from begin delete an individual end delete begin insert a end insert homeownership
savings account shall be included in the income of the payee or
distributee for the taxable year in which the payment or distribution
is made, unless the payment or distribution is used to pay for the
begin delete individual end delete homeownership savings expenses of a qualified taxpayer
who established the account.

(d) For purposes of this section:

(1)  begin delete “Individual homeownership end delete begin insert “Homeownership end insert savings
account” means a trust that meets all of the following requirements:

(A) Is designated as begin delete an individual end delete begin insert a end insert homeownership savings
account by the trustee.

(B) Is established for the exclusive benefit of any qualified
taxpayer establishing the account where the written governing
instrument creating the account provides for the following:

(i) All contributions to the account are required to be in cash.

(ii) The account is established to pay, pursuant to the
requirements and limitations of this section, for the qualified
begin delete individual end delete homeownership savings expenses of a qualified taxpayer
establishing the account.

(C) Is, except as otherwise required or authorized by this section,
subject to the same requirements and limitations as an individual
retirement account established under Section 408 of the Internal
Revenue Code, begin insert relating to individual retirement accounts, end insert and any
regulations adopted thereunder.

(D) Is the only begin delete individual end delete homeownership savings account
established by the qualified taxpayer.

(2) “Qualified begin delete individual end delete homeownership development
expenses” means expenses, including a down payment or begin delete mortgage
payment, end delete begin insert closing costs, end insert paid or incurred in connection with the
purchase of a qualified taxpayer’s principal residence in California
for use by that taxpayer who established the begin delete individual end delete
homeownership savings account.

(3) “Qualified taxpayer” means any individual, or individual’s
spouse, who had no present ownership interest in a principal
residence during the begin delete preceeding end delete begin insert preceding end insert three-year period ending
on the date of the purchase of the principal residence subject to
the contribution allowed by this section.

(4) “Trustee” shall have the same meaning as those terms have
under Section 408 of the Internal Revenue Code, begin insert relating to
individual retirement accounts, end insert and any regulations adopted
thereunder.

SEC. 3.  

This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.