AB 1736, as amended, Steinorth. Personal income taxes: deduction: homeownership savings accounts.
The Personal Income Tax Law, in modified conformity with federal income taxbegin delete lawsend deletebegin insert laws,end insert 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 deductionsbegin delete exceedend deletebegin insert exceedsend insert 2% of adjusted gross income.
This bill, on and after January 1, 2017, would allow a
deduction, not to exceed specified amounts, of the amountbegin insert a qualified taxpayer, as defined,end insert contributed in any taxable year to a homeownership savingsbegin delete account, and,end deletebegin insert account andend insert would exclude from gross income any income earned on the moneys contributed to a homeownership savings account. The bill would provide that a qualified taxpayer may withdraw amounts from a homeownership savings account to pay for qualified homeownership savingsbegin delete expenses, as defined, andend deletebegin insert expenses defined as expenses paid or incurred in connection with the purchase of a
principal residence, which is defined by reference to a federal law and includes a mobilehome. The billend insert would provide that any amount withdrawn from that account that is not used for these expenses would be included as income for that taxpayer.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 a homeownership savings account as defined in
8Section 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 a homeownership savings account, not to exceed
15the 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 qualified taxpayers
19begin delete who are marriedend delete filing a joint return, a 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).
P3 1(c) Any amount withdrawn from a homeownership savings
2account shall be included in the income of the payee or distributee
3for the taxable year in which the payment or distribution is made,
4unless the payment or distribution is used to pay for the
5homeownership savings expenses of a qualified taxpayer who
6established the account.
7(d) For purposes of this section:
8(1) “Homeownership savings account” means a trust that meets
9all of the following requirements:
10(A) Is designated as a homeownership savings account by the
11trustee.
12(B) Is established for the exclusive benefit of any qualified
13taxpayer establishing the account where the written governing
14instrument creating the account provides for the following:
15(i) All contributions to the account are required to be in cash.
16(ii) The account is established to pay, pursuant to the
17requirements and limitations of this section, for the qualified
18homeownership savings expenses of a qualified taxpayer
19establishing the account.
20(C) Is, except as otherwise required or authorized by this section,
21subject to the same requirements and limitations as an individual
22retirement account established under Section 408 of the Internal
23Revenue Code, relating to individual retirement accounts, and any
24regulations
adopted thereunder.
25(D) Is the only homeownership savings account established by
26the qualified taxpayer.
27 (E) Is established by a qualified taxpayer who has a gross
28income of 80 percent or less than the area median income.
29(2) “Qualified homeownershipbegin delete developmentend deletebegin insert savingsend insert expenses”
30means expenses, including a downpayment or closing costs, paid
31or incurred in connection with the purchase of a qualified
32taxpayer’s principal residencebegin insert within the meaning of Section 121
33of the Internal
Revenue Codeend insert inbegin delete Californiaend deletebegin insert this stateend insert for use by
34that taxpayer who established the homeownership savings account.
35(3) “Qualified taxpayer” means any individual, or individual’s
36spouse, who has never had an ownership interest in a principal
37residence subject to the contribution allowed by this section.
38(4) “Trustee” shall have the same meaning asbegin delete those terms haveend delete
39begin insert that term hasend insert under Section 408 of the Internal
Revenue Code,
P4 1relating to individual retirement accounts, and any regulations
2adopted thereunder.
This act provides for a tax levy within the meaning of
4Article IV of the California Constitution and shall go into
5immediate effect.
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