California Senate Bill SB1149 Amended / Bill

 BILL NUMBER: SB 1149AMENDED BILL TEXT AMENDED IN SENATE MAY 2, 2016 INTRODUCED BY Senator Stone FEBRUARY 18, 2016 An act to add Sections 17141.7 and 17205 to 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: deduction: individual home ownership 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, 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 home ownership savings account, and   deduction in an amount equal to the amount of rent, not to exceed $18,000, paid during the   taxable year by a qualified taxpayer, as defined, provided that the qualified taxpayer deposits the qualified amount, as defined, into a home ownership savings account, as defined. The bill  would exclude from gross income any income  earned on the moneys contributed to an individual   accrued during the taxable year to a  home ownership savings account. The bill would provide that a qualified taxpayer may withdraw amounts from  an individual   a  home ownership savings account to pay for  qualified individual home ownership savings expenses,   the downpayment of a principal residence,  as defined, and would provide that any amount withdrawn from that account that is not used for  these expenses   that purpose  would be included as income for that taxpayer.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 17141.7 is added to the Revenue and Taxation Code, to read: 17141.7. 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  an individual   a  home ownership savings account, as defined in Section 17205. SEC. 2. Section 17205 is added to the Revenue and Taxation Code, to read:  17205. (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 an individual home ownership 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) Thirty thousand dollars ($30,000) for a qualified taxpayer who is married filing a joint return, head of household, and surviving spouses, as defined in Section 17046. (2) Fifteen thousand dollars ($15,000) in the case of a qualified taxpayer filing a return other than as described in paragraph (1).   17205.   (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 of rent, not to exceed eighteen thousand dollars ($18,000), paid during the taxable year by a qualified taxpayer provided that the qualified taxpayer deposits the qualified amount into a home ownership savings account.   (c)   (b)  Any amount withdrawn from  an individual   a  home ownership 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  individual home ownership savings expenses of   downpayment of   a principal residence   by  a qualified taxpayer who established the account.  (d)  (c)  For purposes of this section: (1)  "Individual home   "Home  ownership savings account" means a trust that meets all of the following requirements: (A) Is designated as  an individual   a  home ownership 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  of the qualified amount  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 individual home ownership savings expenses of   the downpayment of a principal residence   by  a qualified taxpayer establishing the account.  (iii) The account shall be closed and any remaining balance distributed to the qualified taxpayer after the qualified taxpayer withdraws money from the home ownership savings account for the down payment of a principal residence.  (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,   Code  and any regulations adopted thereunder. If a qualified taxpayer uses the money in the home ownership savings account for the downpayment of a principal residence, no additional tax shall be imposed in accordance with Section 72(t) of the Internal Revenue Code, relating to 10-percent additional tax on early distributions from qualified retirement plans, and Section 219 of the Internal Revenue Code, relating to individual retirement savings, shall not apply. Any age limitations that apply to an individual retirement account established under Section 408 of the Internal Revenue Code, relating to individual retirement plans, shall not apply to a home ownership savings account.  (D) Is the only  individual  home ownership savings account  ever  established by the qualified taxpayer.  (2) "Qualified individual home ownership development expenses" means expenses, including a downpayment or mortgage payment, 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 individual home ownership savings account.   (2) "Principal residence" has the same meaning as within Section 121 of the Internal Revenue Code relating to exclusion of gain from sale of principal residence.   (3) "Qualified amount" means the marginal tax rate applicable to the qualified taxpayer multiplied by the amount of rent, not to exceed eighteen thousand dollars ($18,000), paid during the taxable year by the qualified taxpayer.   (3)   (4)  (A) "Qualified taxpayer" means  any individual, or individual's spouse,   a taxpayer who qualifies under clause (i) or (ii) and  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 principal  residence subject to the contribution allowed by this section.   residence.  A qualified taxpayer's  adjusted  gross income per taxable year shall not exceed the following amounts:  (1)   (i)  One hundred thousand dollars ($100,000) for a qualified taxpayer  who is married  filing a joint return, head of household, or a surviving spouse, as defined in Section 17046.  (2)   (ii)  Fifty thousand dollars ($50,000) for a qualified taxpayer filing a return other than as described in  paragraph (1).   clause (i).  (B) For each taxable year beginning on or after January 1,  2017,   2018, the Franchise Tax Board shall recompute the  adjusted  gross income amounts described in paragraph (A) in the same manner as prescribed in subdivision (h) of Section 17041.  (4)   (5)  "Trustee" shall have the same meaning as it does under Section 408 of the Internal Revenue  Code   Code,  relating to individual retirement accounts, 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.