Massachusetts 2023-2024 Regular Session

Massachusetts House Bill H2727 Compare Versions

Only one version of the bill is available at this time.

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2	2	HOUSE DOCKET, NO. 2672 FILED ON: 1/19/2023
3	3	HOUSE . . . . . . . . . . . . . . . No. 2727
4	4	The Commonwealth of Massachusetts
5	5	_________________
6	6	PRESENTED BY:
7	7	Daniel R. Carey and Dylan A. Fernandes
8	8	_________________
9	9	To the Honorable Senate and House of Representatives of the Commonwealth of Massachusetts in General
10	10	Court assembled:
11	11	The undersigned legislators and/or citizens respectfully petition for the adoption of the accompanying bill:
12	12	An Act encouraging home ownership by establishing a first time home buyers savings account.
13	13	_______________
14	14	PETITION OF:
15	15	NAME:DISTRICT/ADDRESS :DATE ADDED:Daniel R. Carey2nd Hampshire1/19/2023Dylan A. FernandesBarnstable, Dukes and Nantucket1/19/2023 1 of 8
16	16	HOUSE DOCKET, NO. 2672 FILED ON: 1/19/2023
17	17	HOUSE . . . . . . . . . . . . . . . No. 2727
18	18	By Representatives Carey of Easthampton and Fernandes of Falmouth, a petition (accompanied
19	19	by bill, House, No. 2727) of Daniel R. Carey and Dylan A. Fernandes relative to the
20	20	establishment of first-time homebuyer savings accounts and providing for an income tax
21	21	deduction for certain amounts contributed to such accounts. Revenue.
22	22	The Commonwealth of Massachusetts
23	23	_______________
24	24	In the One Hundred and Ninety-Third General Court
25	25	(2023-2024)
26	26	_______________
27	27	An Act encouraging home ownership by establishing a first time home buyers savings account.
28	28	Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority
29	29	of the same, as follows:
30	30	1 SECTION 1. Chapter 62 of the General Laws is hereby amended by inserting after
31	31	2section 5C the following new section:-
32	32	3 Section 5D. Definitions applicable to this section and section 5E.
33	33	4 The following words and phrases for the purposes of this sections and the following
34	34	5section shall have the following meanings:
35	35	6 “Account holder” means an individual who establishes, individually or jointly with one
36	36	7or more other individuals, a first-time homebuyer savings account.
37	37	8 “Allowable closing costs” means a disbursement listed on a settlement statement for the
38	38	9purchase of a single-family residence in Massachusetts by a qualified beneficiary. 2 of 8
39	39	10 “Eligible costs” means the down payment and allowable closing costs for the purchase of
40	40	11a single-family residence in Massachusetts by a qualified beneficiary.
41	41	12 “Financial institution” means any bank, trust company, savings institution, industrial loan
42	42	13association, consumer finance company, credit union, or any benefit association, insurance
43	43	14company, safe deposit company, money market mutual fund, or similar entity authorized to do
44	44	15business in Massachusetts.
45	45	16 “First-Time Homebuyer” means an individual who resides in Massachusetts and has not
46	46	17owned or purchased, either individually or jointly, a single-family residence during a period of
47	47	18three (3) years prior to the date of the purchase of a single-family residence.
48	48	19 “First-Time Home Buyer Savings Account” or “account” means an account with a
49	49	20financial institution that an account holder designates as a first-time home buyer savings account
50	50	21on the account holder’s Massachusetts income tax return for tax year 2024 or any tax year
51	51	22thereafter, pursuant to this Chapter for the purpose of paying or reimbursing eligible costs for the
52	52	23purchase of a single-family residence in Massachusetts by a qualified beneficiary.
53	53	24 “Qualified Beneficiary” means a first-time home buyer who is designated as the qualified
54	54	25beneficiary of an account designated by the account holder as a first-time home buyer savings
55	55	26account.
56	56	27 “Settlement Statement” means the statement of receipts and disbursements for a
57	57	28transaction related to real estate, including a statement prescribed under the Real Estate
58	58	29Settlement Procedures Act of 1974, 12 U.S.C. 2601 et seq., as amended, and regulations
59	59	30thereunder. 3 of 8
60	60	31 “Single-Family Residence” means a single-family residence owned and occupied by a
61	61	32qualified beneficiary as the qualified beneficiary’s principal residence, which may include a
62	62	33manufactured home, trailer, mobile home, condominium unit, or cooperative.
63	63	34 SECTION 2. Chapter 62 is hereby amended by inserting after section 5D the following
64	64	35new section:-
65	65	36 Section 5E. Designation and Use of First-Time Home Buyer Savings Account.
66	66	37 (a) Beginning January 1, 2024, any individual may open an account with a financial
67	67	38institution and designate the account, in its entirety, as a first-time home buyer savings account
68	68	39to be used to pay or reimburse a qualified beneficiary’s eligible costs for the purchase of a
69	69	40single-family residence in Massachusetts.
70	70	41 (b) An account holder must designate no later than April 15 of the year following the tax
71	71	42year during which the account is established, a first-time home buyer as the qualified beneficiary
72	72	43of the first-time home buyer savings account. The account holder may designate himself or
73	73	44herself as the qualified beneficiary and may change the designated qualified beneficiary at any
74	74	45time, but there may not be more than one qualified beneficiary at any one time.
75	75	46 (c) An individual may jointly own a first-time home buyer savings account with another
76	76	47person if the joint account holders file a joint income tax return.
77	77	48 (d) An individual may be the account holder of more than one first-time home buyer
78	78	49savings account. However, an account holder cannot have multiple accounts that designate the
79	79	50same qualified beneficiary. 4 of 8
80	80	51 (e) An individual may be designated as the qualified beneficiary on more than one first-
81	81	52time home buyer savings account.
82	82	53 (f) Only cash and marketable securities may be contributed to a first-time home buyer
83	83	54savings account. Subject to the limitations of this section, persons other than the account holder
84	84	55may contribute funds to a first-time home buyer savings account. There is no limitation on the
85	85	56amount of contributions that may be made to or retained in a first-time home buyer savings
86	86	57account.
87	87	58 (g) The funds held in a first-time home buyer savings account shall not be used to pay
88	88	59expenses of administering the account, except that a service fee may be deducted from the
89	89	60account by a financial institution in which the account is held;
90	90	61 (h) The account holder shall submit the following to the department of revenue:
91	91	62 (1) detailed information regarding the first-time home buyer savings account, including a
92	92	63list of transactions for the account during the tax year and the Form 1099 issued by the financial
93	93	64institution for such account with the account holder’s Massachusetts income tax return on forms
94	94	65prepared by the department of revenue; and
95	95	66 (2) a detailed account of the eligible costs toward which the account funds were applied,
96	96	67if there was a withdrawal from the account, and a statement of the amount of funds remaining in
97	97	68the account, if any.
98	98	69 (i)Under this section and section 5D of this chapter, a financial institution shall not be
99	99	70required to: 5 of 8
100	100	71 (1) Designate an account as a first-time home buyer savings account, or designate the
101	101	72qualified beneficiaries of an account, in the financial institution’s account contracts or systems or
102	102	73in any other way;
103	103	74 (2) Track the use of funds withdrawn from a first-time home buyer savings account;
104	104	75 (3) Allocate funds in a first-time home buyer savings account among joint account
105	105	76holders or multiple qualified beneficiaries; or
106	106	77 (4) Report any information to the Department of Revenue or any other governmental
107	107	78agency that is not otherwise required by law.
108	108	79 (j)A financial institution is not responsible or liable for:
109	109	80 (1) Determining or ensuring that an account satisfies the requirements to be a first-time
110	110	81home buyer savings account;
111	111	82 (2) Determining or ensuring that funds in a first-time home buyer savings account are
112	112	83used for eligible costs; or
113	113	84 (3) Reporting or remitting taxes or penalties related to the use of a first-time home buyer
114	114	85savings account.
115	115	86 (k) Except as otherwise provided in this section and subject to the limitations under this
116	116	87subsection, there shall be deducted from taxable income of an account holder, for Massachusetts
117	117	88income tax purposes: 6 of 8
118	118	89 (1) the amount contributed to a first-time home buyer savings account during each tax
119	119	90year, not to exceed $5,000 for an account holder who files an individual tax return or $10,000 for
120	120	91joint account holders who file a joint tax return.
121	121	92 (2) the amount of earnings, including interest and other income on the principal, from the
122	122	93first-time home buyer savings account during the tax year.
123	123	94 (l) An account holder may claim the deduction and exclusion under subsection (k):
124	124	95 (1) For a period not to exceed 15 years;
125	125	96 (2) For an aggregate total amount of principal and earnings, not to exceed $50,000 during
126	126	97that 15-year period; and
127	127	98 (3) Only if the principal and earnings of the account remain in the account until a
128	128	99withdrawal is made for eligible costs related to the purchase of a single-family residence by a
129	129	100qualified beneficiary, except as otherwise provided in this section.
130	130	101 (m) Any funds in a first-time home buyer savings account not expended on eligible costs
131	131	102by December 31 of the last year of the 15-year period under Subsection 7(2)(a) of this Chapter
132	132	103shall thereafter be included in the account holder’s taxable income.
133	133	104 (n) A person other than the account holder who deposits funds in a first-time home buyer
134	134	105savings account shall not be entitled to the deduction and exclusion provided for under this
135	135	106Chapter.
136	136	107 (o) The deduction and exclusion from taxable income provided for by this Section shall
137	137	108apply to any alternative bases for calculating taxable income for Massachusetts income tax
138	138	109purposes. 7 of 8
139	139	110 (p) Except as otherwise authorized in this of this section, if the account holder withdraws
140	140	111any funds from a first-time home buyer savings account for a purpose other than eligible costs
141	141	112for the purchase of a single-family residence:
142	142	113 (1) Those funds shall be included in the account holder’s taxable income; and
143	143	114 (2) The account holder shall pay a penalty to the Department of Revenue equal to the tax
144	144	115that would have been collected had the withdrawn funds been subject to income tax. Such
145	145	116penalty shall not apply to funds withdrawn from an account that were:
146	146	117 (i) Withdrawn by reason of the account holder’s death or disability;
147	147	118 (ii) A disbursement of assets of the account pursuant to a filing for protection under the
148	148	119United States Bankruptcy Code, 11 U.S.C. § 101 et seq.; or
149	149	120 (iii) A transfer of the funds from a first-time home buyer savings account to a new first-
150	150	121time home buyer savings account held by a different financial institution or the same financial
151	151	122institution.
152	152	123 (q) The Department of Revenue shall prepare forms for:
153	153	124 (1) The designation of an account with a financial institution to serve as a first-time home
154	154	125buyer savings account;
155	155	126 (2) The designation of a qualified beneficiary of a first-time home buyer savings account;
156	156	127and
157	157	128 (3) For an account holder to annually submit to the Department of Revenue detailed
158	158	129information regarding the first-time home buyer savings account, including but not limited to a 8 of 8
159	159	130list of transactions for the account during the tax year, and identifying any supporting
160	160	131documentation that is required to be maintained by the account holder.