AB 1736, as amended, Steinorth. Personal income taxes: deduction: 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 exceeds 2% of adjusted gross income.
This bill,begin insert upon appropriation of specified funds by the Legislature,end insert on and after January 1, 2017,begin insert and before January 1, 2019,end insert would allow a deduction, not to exceed specified amounts, of the amount a qualified taxpayer, as defined, contributed in any taxable year to a homeownership savings account and 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 savings 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 The bill would provide that any amount withdrawn from that account that is not used for these expenses would be included as income for that taxpayer.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:
begin insert(a)end insertbegin insert end insert For each taxable year beginning on or after
4January 1, 2017,begin insert and before January 1, 2019,end insert gross income does
5not include, under the same conditions as provided in Section 408
6of the Internal Revenue Code, relating to individual retirement
7accounts, any income accruing during the taxable year to a
8homeownership savings account as defined in Section 17204.5.
9
(b) This section shall become operative on the effective date of
10any budget measure specifically appropriating funds to the
11Franchise Tax Board for its costs of administering this section.
12
(c) This section shall remain in effect only until December 1,
132019, and as of that date is repealed.
Section 17204.5 is added to the Revenue and Taxation
15Code, to read:
(a) For each taxable year beginning on or after
17January 1, 2017,begin insert and before January 1, 2019,end insert there shall be allowed
18as a deduction an amount equal to the amount contributed by a
19qualified taxpayer during the taxable year to a homeownership
P3 1savings account, not to exceed the amounts specified in subdivision
2(b).
3(b) The deduction allowed under subdivision (a) shall not exceed
4the following amounts:
5(1) Twenty thousand dollars ($20,000) for qualified taxpayers
6filing a joint return, a head of household, and surviving
spouses,
7as defined in Section 17046.
8(2) Ten thousand dollars ($10,000) in the case of a qualified
9
taxpayer filing a return other than as described in paragraph (1).
10(c) Any amount withdrawn from a homeownership savings
11account shall be included in the income of the payee or distributee
12for the taxable year in which the payment or distribution is made,
13unless the payment or distribution is used to pay for the
14homeownership savings expenses of a qualified taxpayer who
15established the account.
16(d) For purposes of this section:
17(1) “Homeownership savings account” means a trust that meets
18all of the following requirements:
19(A) Is designated as a homeownership savings account by the
20trustee.
21(B) Is established for the exclusive benefit of any qualified
22taxpayer establishing the account where the written governing
23instrument creating the account provides for the following:
24(i) All contributions to the account are required to be in cash.
25(ii) The account is established to pay, pursuant to the
26requirements and limitations of this section, for the qualified
27homeownership savings expenses of a qualified taxpayer
28establishing the account.
29(C) Is, except as otherwise required or authorized by this section,
30subject to the same requirements and limitations as an individual
31retirement account established under Section 408 of the Internal
32Revenue Code, relating to individual retirement accounts, and any
33regulations
adopted thereunder.
34(D) Is the only homeownership savings account established by
35the qualified taxpayer.
36 (E) Is established by a qualified taxpayer who has a gross
37income of 80 percent or less than the area medianbegin delete income.end deletebegin insert income
38in which the taxpayer resides.end insert
39(2) “Qualified homeownership savings expenses” means
40expenses, including a downpayment or closing costs, paid or
P4 1incurred in connection with the purchase of a qualified taxpayer’s
2principal residence within the meaning of Section 121 of the
3Internal Revenue Code in this state for use by that
taxpayer who
4established the homeownership savings account.
5(3) “Qualified taxpayer” means any individual, or individual’s
6spouse, who has never had an ownership interest in a principal
7residence subject to the contribution allowed by this section.
8(4) “Trustee” shall have the same meaning as that term has
9under Section 408 of the Internal Revenue Code, relating to
10individual retirement accounts, and any regulations adopted
11thereunder.
12
(e) This section shall become operative on the effective date of
13any budget measure specifically appropriating funds to the
14Franchise Tax Board for its costs of administering this section.
15
(f) This section shall remain in effect only until December 1,
162019, and as of that date is repealed.
This act provides for a tax levy within the meaning of
18Article IV of the California Constitution and shall go into
19immediate effect.
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