Bill Text: CA SB1149 | 2015-2016 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Personal income taxes: credit: principal residence.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Failed) 2016-11-30 - From committee without further action. [SB1149 Detail]

Download: California-2015-SB1149-Amended.html

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BILL NUMBER: SB 1149	AMENDED
	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withdrawn from that account that is not used for  these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.