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  JUNE 1, 2016
	AMENDED IN SENATE  MAY 2, 2016

INTRODUCED BY   Senator Stone

                        FEBRUARY 18, 2016

   An act to add  Sections 17141.7 and 17205 to 
 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: 
deduction: individual home ownership savings accounts.  
credit: principal residence. 
   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.   Law allows various credits against the taxes
imposed by that law.  
   This bill, on and after January 1, 2017, would allow a 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 accrued during the
taxable year to a home ownership savings account. The bill would
provide that a qualified taxpayer may withdraw amounts from a home
ownership savings account to pay for the downpayment of a principal
residence, as defined, and would provide that any amount withdrawn
from that account that is not used for that purpose would be included
as income for that taxpayer. The bill would define various terms for
its purposes.  
   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, that has never been
occupied, 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.
   (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.
   (2) 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.
   (3) 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 (1) 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.  
  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 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 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.
   (b) Any amount withdrawn from 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 downpayment of a
principal residence by a qualified taxpayer who established the
account.
   (c) For purposes of this section:
   (1) "Home ownership savings account" means a trust that meets all
of the following requirements:
   (A) Is designated as 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 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 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 home ownership savings account ever established by
the qualified taxpayer.
   (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.
   (4) (A) "Qualified taxpayer" means 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. A qualified
taxpayer's adjusted gross income per taxable year shall not exceed
the following amounts:
   (i) 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.
   (ii) Fifty thousand dollars ($50,000) for a qualified taxpayer
filing a return other than as described in clause (i).
   (B) For each taxable year beginning on or after January 1, 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.
   (5) "Trustee" shall have the same meaning as it does under Section
408 of the Internal Revenue 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.