Bill Text: IA HF2470 | 2017-2018 | 87th General Assembly | Introduced

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Bill Title: A bill for an act relating to the Iowa first-time homebuyer savings account program, and including effective date and retroactive applicability provisions.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2018-03-19 - Subcommittee Meeting: 03/21/2018 8:00AM House Lounge. [HF2470 Detail]

Download: Iowa-2017-HF2470-Introduced.html

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House File 2470 - Introduced




                                 HOUSE FILE       
                                 BY  BERGAN

                                      A BILL FOR

  1 An Act relating to the Iowa first=time homebuyer savings
  2    account program, and including effective date and
  3    retroactive applicability provisions.
  4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
    TLSB 5890YH (4) 87
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PAG LIN



  1  1    Section 1.  Section 422.7, subsection 41, paragraphs a and b,
  1  2 Code 2018, are amended to read as follows:
  1  3    a.  Subject to the restrictions in paragraph "b", subtract
  1  4 the sum of the following amounts:
  1  5    (1)  (a)  The amount of contributions made by an account
  1  6 holder during the tax year to the account holder's first=time
  1  7 homebuyer savings accounts, not to exceed the following annual
  1  8 limit:
  1  9    (a)  (i)  For married taxpayers who file a joint return and
  1 10 maintain a joint first=time homebuyer savings account, four
  1 11 thousand dollars. 
  1 12    (ii)  For any other account holder, of two thousand dollars.
  1 13    (b)  For the tax year beginning in the 2018 calendar year
  1 14 and for each subsequent tax year, the director shall multiply
  1 15 each the dollar amount set forth in subparagraph division
  1 16 (a), subparagraph subdivisions (i) and (ii), by the latest
  1 17 cumulative inflation factor, shall round off the resulting
  1 18 product to the nearest one dollar, and shall incorporate the
  1 19 result into the income tax forms and instructions for each tax
  1 20 year. For purposes of this subparagraph division, "cumulative
  1 21 inflation factor" means the product of the annual inflation
  1 22 factor for the 2018 calendar year and all annual inflation
  1 23 factors for subsequent calendar years as determined by section
  1 24 422.4, subsection 1, paragraph "a". The cumulative inflation
  1 25 factor applies to all tax years beginning on or after January
  1 26 1 of the calendar year for which the latest annual inflation
  1 27 factor has been determined. Notwithstanding any other
  1 28 provision, the annual inflation factor for the 2018 calendar
  1 29 year is one hundred percent.
  1 30    (2)  To the extent included, income from interest received
  1 31 from the account holder's first=time homebuyer savings
  1 32 accounts.
  1 33    b.  (1)  The subtraction in paragraph "a" shall not exceed
  1 34 the following aggregate lifetime limit:
  1 35    (a)  For married taxpayers who file a joint return and
  2  1 maintain a joint first=time homebuyer savings account, an
  2  2 amount equal to the product of the deductible amount determined
  2  3 for the year in paragraph "a", subparagraph (1), subparagraph
  2  4 division (a), subparagraph subdivision (i), multiplied by ten. 
  2  5    (b)  For any other account holder, an amount equal to the
  2  6 product of the deductible amount determined for the year in
  2  7 which the first=time homebuyer savings account is first opened
  2  8 as calculated in paragraph "a", subparagraph (1), subparagraph
  2  9 division (a), subparagraph subdivision (ii), multiplied by ten.
  2 10    (2)  The subtraction in paragraph "a" shall not be allowed to
  2 11 an account holder upon one of the following dates, whichever
  2 12 occurs first:
  2 13    (a)  January 1 of the tenth calendar year after the calendar
  2 14 year during which the account holder first opened a first=time
  2 15 homebuyer savings account.
  2 16    (b)  The date on which funds within an account holder's
  2 17 first=time homebuyer savings account are withdrawn for purposes
  2 18 other than the payment or reimbursement of the designated
  2 19 beneficiary's eligible home costs in connection with a
  2 20 qualified home purchase. Any amount transferred between
  2 21 different first=time homebuyer savings accounts of the same
  2 22 account holder by a person other than the account holder
  2 23 shall not be considered a withdrawal for purposes of this
  2 24 subparagraph division (b).
  2 25    Sec. 2.  Section 422.7, subsection 41, paragraph c,
  2 26 subparagraph (1), Code 2018, is amended to read as follows:
  2 27    (1)  Add, to the extent previously deducted under paragraph
  2 28 "a", subparagraph (1), the amount withdrawn during the tax year
  2 29 from an account holder's first=time homebuyer savings account
  2 30 for purposes other than the payment or reimbursement of the
  2 31 designated beneficiary's eligible home costs in connection with
  2 32 a qualified home purchase.
  2 33    Sec. 3.  Section 541B.2, subsection 3, Code 2018, is amended
  2 34 to read as follows:
  2 35    3.  "Designated beneficiary" means an individual meeting the
  3  1 requirements of section 541B.3, subsection 2, and a first=time
  3  2 homebuyer designated by an account holder as beneficiary of the
  3  3 account holder's first=time homebuyer savings account pursuant
  3  4 to section 541B.3, subsection 2.
  3  5    Sec. 4.  Section 541B.2, subsection 6, unnumbered paragraph
  3  6 1, Code 2018, is amended to read as follows:
  3  7 "First=time homebuyer" means an individual who is a resident
  3  8 of Iowa and who does not own, either individually or jointly, a
  3  9 single=family or multifamily residence, and who has not owned
  3 10 or purchased, either individually or jointly, a single=family
  3 11 or multifamily residence for a period of three years prior to
  3 12 all of the following:
  3 13    Sec. 5.  Section 541B.2, subsections 7 and 11, Code 2018, are
  3 14 amended to read as follows:
  3 15    7.  "First=time homebuyer savings account" means an account
  3 16 that constitutes a savings deposit as defined 12 C.F.R.
  3 17 {204.2(d), that meets the requirements of sections 541B.3 and
  3 18 541B.4, and that was established for the purpose of paying or
  3 19 reimbursing a designated beneficiary's eligible home costs in
  3 20 connection with a qualified home purchase.
  3 21    11.  "Single=family residence" means a single=family
  3 22 residence owned and occupied as defined in section 562A.6,
  3 23 a manufactured home, mobile home, condominium unit, or
  3 24 cooperative that is purchased by a designated beneficiary and
  3 25 will be owned and occupied as the designated beneficiary's
  3 26 principal residence, including but not limited to a
  3 27 manufactured home, mobile home, condominium unit, or
  3 28 cooperative within ninety days of the closing date.
  3 29    Sec. 6.  Section 541B.3, subsection 1, Code 2018, is amended
  3 30 to read as follows:
  3 31    1.  Establishment of account.
  3 32    a.  Beginning January 1, 2018, an individual may open an
  3 33 interest=bearing savings account with a financial institution
  3 34 and designate the entire account as a first=time homebuyer
  3 35 savings account for the purpose of paying or reimbursing a
  4  1 designated beneficiary's eligible home costs in connection with
  4  2 a qualified home purchase. The first=time homebuyer savings
  4  3 account designation shall be made no later than April 30 the
  4  4 last day of the fourth month after the expiration of the year
  4  5 following the tax year during which the account is opened, on
  4  6 forms provided by the department.
  4  7    b.  A married couple electing to file a joint Iowa individual
  4  8 income tax return may establish a joint first=time homebuyer
  4  9 savings account. Married taxpayers electing to file separate
  4 10 tax returns or separately on a combined tax return for Iowa tax
  4 11 purposes shall not establish or maintain a joint first=time
  4 12 homebuyer savings account. 
  4 13    c.  b.  An individual may establish more than one first=time
  4 14 homebuyer savings account, provided each account has a
  4 15 different designated beneficiary.
  4 16    Sec. 7.  Section 541B.3, subsection 2, paragraph a, Code
  4 17 2018, is amended to read as follows:
  4 18    a.  The account holder shall designate one individual as
  4 19 beneficiary of the first=time homebuyer savings account. The
  4 20 designation shall be made on forms provided by the department
  4 21 and filed with the department no later than April 30 of the
  4 22 year following the last day of the fourth month after the
  4 23 expiration of the tax year during which the account is opened.
  4 24 The account holder may change the designated beneficiary of the
  4 25 first=time homebuyer savings account at any time.
  4 26    Sec. 8.  Section 541B.4, subsection 3, Code 2018, is amended
  4 27 to read as follows:
  4 28    3.  Required reports.  The account holder shall submit the
  4 29 following information to the department:
  4 30    a.  An annual report for the first=time homebuyer savings
  4 31 account on forms furnished by the department. The report shall
  4 32 be included with the Iowa income tax return of the account
  4 33 holder.
  4 34    b.  A copy of the federal internal revenue service form
  4 35 1099, or other similar federal internal revenue service income
  5  1 reporting form, if any, issued for the first=time homebuyer
  5  2 savings account to the account holder by the financial
  5  3 institution where the account is held. The form shall be
  5  4 included with the Iowa income tax return of the account holder. 
  5  5    c.  b.  Upon a withdrawal of funds from a first=time
  5  6 homebuyer savings account, a transaction report on forms
  5  7 furnished by the department.
  5  8    Sec. 9.  EFFECTIVE DATE.  This Act, being deemed of immediate
  5  9 importance, takes effect upon enactment.
  5 10    Sec. 10.  RETROACTIVE APPLICABILITY.  This Act applies
  5 11 retroactively to January 1, 2018, for tax years beginning on
  5 12 or after that date.
  5 13                           EXPLANATION
  5 14 The inclusion of this explanation does not constitute agreement with
  5 15 the explanation's substance by the members of the general assembly.
  5 16    This bill makes numerous changes to the Iowa first=time
  5 17 homebuyer savings account program in Code chapter 541B
  5 18 (program).
  5 19    The bill removes the requirement that a first=time homebuyer
  5 20 be a resident of Iowa.  The bill modifies the definition of
  5 21 "first=time homebuyer savings account" under the program to
  5 22 provide that the account must constitute a savings deposit
  5 23 as that term is defined for purposes of the federal reserve
  5 24 system.  The bill modifies the definition of "single=family
  5 25 residence" under the program to include a reference to the
  5 26 definition of "single=family residence" under the uniform
  5 27 residential landlord and tenant law (Code chapter 562A), and to
  5 28 require that the single=family residence be owned and occupied
  5 29 by the designated beneficiary within 90 days of the closing
  5 30 date.
  5 31    The bill strikes the ability of a married couple filing joint
  5 32 individual income tax returns to establish and maintain a joint
  5 33 first=time homebuyer savings account (account).
  5 34    The bill modifies various deadlines for filing forms and
  5 35 making designations under the program from April 30 of the year
  6  1 following the year the account is opened, to the last day of
  6  2 the fourth month after the expiration of the tax year during
  6  3 which the account is opened.
  6  4    The bill strikes the requirement that an annual report for
  6  5 an account be included with the account holder's Iowa income
  6  6 tax return, and further strikes a requirement that an account
  6  7 holder submit a copy of the federal internal revenue service
  6  8 form 1099 related to an account with the account holder's Iowa
  6  9 income tax return.
  6 10    Finally, the bill makes changes to the income tax benefits
  6 11 related to contributions to and earnings from an account.
  6 12 Under current law, account holders are allowed a deduction
  6 13 for the first $2,000 of contributions made to an account
  6 14 during a tax year, and that $2,000 annual limit is indexed to
  6 15 inflation and increased each tax year.  Current law also sets a
  6 16 lifetime limit on the total amount of contributions that may be
  6 17 deductible on an account holder's income tax return equal to 10
  6 18 times the annual contribution limit determined for the year.
  6 19 The bill modifies this lifetime limit by setting it as an
  6 20 amount equal to 10 times the annual contribution limit for the
  6 21 year in which the account is first opened by an account holder.
  6 22    Also under current law, previously deducted account
  6 23 contributions are added back to income, and thus taxable, to
  6 24 the extent the amounts are later withdrawn from an account
  6 25 for purposes other than the payment or reimbursement of a
  6 26 designated beneficiary's eligible home costs under the program.
  6 27 The bill specifies that this add=back requirement also applies
  6 28 to previously deducted interest earned on the account.
  6 29    The bill takes effect upon enactment and applies
  6 30 retroactively to January 1, 2018, for tax years beginning on
  6 31 or after that date.
       LSB 5890YH (4) 87
       mm/jh