Amended in Senate June 15, 2016

Amended in Senate June 1, 2016

Amended in Senate May 2, 2016

Senate Bill No. 1149

Introduced by Senator Stone

February 18, 2016

An act to add and repeal Section 17059 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.

LEGISLATIVE COUNSEL’S DIGEST

SB 1149, as amended, Stone. Personal income taxes: credit: principal residence.

The Personal Income Tax Law allows various credits against the taxes imposed by that law.

This bill would, for a qualified principal residence, as defined, that is purchased after January 1, 2017, and before January 1, 2020, allow a credit against those taxes in an amount equal to the lesser of 5% of the purchase price or $10,000 to qualified first-time homebuyers, as defined. This bill would require the credit to be applied in equal amounts over 3 successive taxable years and would limit the total amount of the credit that may be allowed to $100,000,000.

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 17059 is added to the Revenue and
Taxation Code, to read:

17059.  

(a) (1) In the case of any qualified first-time
homebuyer who purchases a qualified principal residence on and
after January 1, 2017, and before January 1, 2020, there shall be
allowed as a credit against the “net tax,” as defined in Section
17039, an amount equal to the lesser of 5 percent of the purchase
price of the qualified principal residence or ten thousand dollars
($10,000).

(2) The amount of any credit allowed under paragraph (1) shall
be applied in equal amounts over the three successive taxable years
beginning with the taxable year in which the purchase of the
qualified principal residence is made.

(3) The credit under this section shall be allowed for the
purchase of only one qualified principal residence with respect to
any qualified first-time homebuyer.

(b) For purposes of this section:

(1) “Qualified first-time homebuyer” means any individual, or
the individual’s spouse, who had no present ownership interest in
a principal residence during the preceding three-year period ending
on the date of the purchase of the qualified principal residence. A
qualified first-time homebuyer’s adjusted gross income during that
period shall not exceed the following amounts:

(A) One hundred thousand dollars ($100,000) for a qualified
taxpayer filing a joint return, head of household, or a surviving
spouse, as defined in Section 17046.

(B) Fifty thousand dollars ($50,000) for a qualified taxpayer
filing a return other than as described in subparagraph (A).

(2) “Qualified principal residence” means a single-family
residence, whether detached or attached, begin delete that has never been
occupied, end delete that is purchased to be the principal residence of the
taxpayer for a minimum of two years and is eligible for the
homeowner’s exemption under Section 218.

begin delete

(c) (1) No credit shall be allowed under this section unless the
qualified first-time homebuyer submits with his or her tax return
a certification by the seller of the qualified principal residence that
the residence has never been previously occupied. The seller shall
provide the certification to the qualified first-time homebuyer and
to the Franchise Tax Board within one week of the sale of the
qualified principal residence.

end delete begin delete

(2)

end delete

begin insert (c) end insert   begin insert (1) end insert begin insert   end insert If the qualified first-time homebuyer does not occupy
the qualified principal residence as his or her principal residence
for at least two years immediately following the purchase the credit
shall be canceled, and the qualified first-time homebuyer shall be
liable for any credit allowed under this section on previous tax
returns.

begin delete

(3)

end delete

begin insert (2) end insert  A credit shall not be allowed under this section unless the
qualified first-time homebuyer submits a certification that he or
she is a first-time homebuyer.

(d) (1) In the case of two married qualified first-time
homebuyers filing separately, the credit allowed under subdivision
(a) shall be equally apportioned between the two qualified first-time
homebuyers.

(2) If two or more qualified first-time homebuyers who are not
married purchase a qualified principal residence, the amount of
the credit allowed under subdivision (a) shall be allocated among
them in the same manner as each qualified first-time homebuyer’s
percentage of ownership, except that the total amount of the credits
allowed to all of these qualified first-time homebuyers shall not
exceed ten thousand dollars ($10,000).

(e) The total amount of credit that may be allowed pursuant to
this section shall not exceed one hundred million dollars
($100,000,000).

(f) The qualified first-time homebuyer shall claim the credit on
a timely filed original return.

(g) (1) Upon receipt of the certification from the qualified
first-time homebuyer, as described in paragraph begin delete (1) end delete begin insert (2) end insert of
subdivision (c), the Franchise Tax Board shall allocate the credit
to the qualified first-time homebuyer on a first-come-first-served
basis.

(2) If the certifications of two or more qualified first-time
homebuyers are received on the same day and the remaining
amount of credit to be allocated is insufficient to be allocated fully
to each, the credit shall be allocated to those qualified first-time
homebuyers on a pro rata basis.

(3) The date a certification is received shall be determined by
the Franchise Tax Board. The determinations of the Franchise Tax
Board with respect to the date a certification is received, and
whether a return has been timely filed for purposes of this
subdivision, may not be reviewed in any administrative or judicial
proceeding.

(4) Any disallowance of a credit claimed due to a determination
under this section, including the application of the limitation
specified in paragraph (2), shall be treated as a mathematical error
appearing on the return. Any amount of tax resulting from that
disallowance may be assessed by the Franchise Tax Board in the
same manner as provided by Section 19051.

(h) A credit shall not be allowed under this section if the
qualified first-time homebuyer, or his or her spouse, is related to
the seller within the meaning of Section 267 of the Internal
Revenue Code, related to losses, expenses, and interest with respect
to transactions between related taxpayers.

(i) A credit shall not be allowed under this section if the qualified
first-time homebuyer qualifies as a dependent, as defined in Section
17056, of any other taxpayer during the taxable year of the
purchase.

(j) The Franchise Tax Board may prescribe rules, guidelines,
or procedures necessary or appropriate to carry out the purposes
of this section, including any guidelines regarding the allocation
of the credit allowed under this section. Chapter 3.5 (commencing
with Section 11340) of Part 1 of Division 3 of Title 2 of the
Government Code does not apply to any rule, guideline, or
procedure prescribed by the Franchise Tax Board pursuant to this
section.

(k) Section 41 does not apply to the credit allowed by this
section.

(l) This section shall remain in effect only until December 1,
2023, and as of that date is repealed.

SEC. 2.  

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