Bill Text: CA AB1865 | 2023-2024 | Regular Session | Amended
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Personal income taxes: exclusion: homeownership savings accounts.
Spectrum: Partisan Bill (Republican 7-0)
Status: (Introduced) 2024-05-16 - In committee: Held under submission. [AB1865 Detail]
Download: California-2023-AB1865-Amended.html
Bill Title: Personal income taxes: exclusion: homeownership savings accounts.
Spectrum: Partisan Bill (Republican 7-0)
Status: (Introduced) 2024-05-16 - In committee: Held under submission. [AB1865 Detail]
Download: California-2023-AB1865-Amended.html
|
Amended
IN
Assembly
February 15, 2024 |
CALIFORNIA LEGISLATURE—
2023–2024 REGULAR SESSION
Assembly Bill
No. 1865
| Introduced by Assembly Members Jim |
January 18, 2024 |
An act to add and repeal Sections 17141.7 and 17204.5 to of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.
LEGISLATIVE COUNSEL'S DIGEST
AB 1865, as amended, Jim Patterson
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, 2024, and before January 1, 2029, would allow a deduction, not to exceed specified amounts, of the amount a qualified taxpayer, as defined, contributed in any taxable year to a homeownership savings account and would exclude from gross income any income earned on the moneys contributed to a homeownership savings
account. The bill would provide that a qualified taxpayer may withdraw amounts from a homeownership savings account to pay for qualified homeownership savings expenses, defined as expenses paid or incurred in connection with the purchase of a principal residence in this state. The bill would provide that any amount withdrawn from that account that is not used for these expenses would be included as income for that taxpayer. The bill would define various terms for its purposes.
Existing law requires a bill authorizing a new tax expenditure to contain, among other things, specific goals, purposes, and objectives the tax expenditure will achieve, detailed performance indicators, and data collection requirements.
This bill would include additional information required for any bill authorizing a new tax expenditure.
This bill would take effect immediately as a tax levy.
Digest Key
Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NOBill Text
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.
(a) For each taxable year beginning on or after January 1, 2024, and before January 1, 2029, 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 homeownership savings account, as defined in Section 17204.5.(b) For purposes of complying with Section 41, the goal, purpose, objective, performance indicators, and data collection requirements for the exclusion allowed by this section shall be as specified in subdivision (e) of
Section 17204.5.
(c) This section shall remain in effect only until December 1, 2029, and as of that date is repealed.
SEC. 2.
Section 17204.5 is added to the Revenue and Taxation Code, to read:17204.5.
(a) For each taxable year beginning on or after January 1, 2024, and before January 1, 2029, there shall be allowed a deduction in the amount equal to the amount contributed by a qualified taxpayer during the taxable year to a homeownership 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) Twenty thousand dollars ($20,000) for qualified taxpayers filing a joint, head of household, or surviving spouse,
as defined in Section 17046, return.
(2) Ten thousand dollars ($10,000) in the case of a qualified taxpayer filing a return other than as described in paragraph (1).
(c) Any amount withdrawn from a homeownership savings account shall be included in the income of the qualified taxpayer for the taxable year in which the payment or distribution is made, unless the payment or distribution is used to pay for the qualified homeownership savings expenses of a qualified taxpayer who established the account.
(d) For purposes of this section:
(1) “Homeownership savings account” means a trust that meets all of the following requirements:
(A) Is designated as a homeownership savings account by the trustee.
(B) Is established by a qualified taxpayer, or by qualified taxpayers who are spouses, 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 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 homeownership savings expenses of a qualified taxpayer establishing the account.
(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, relating to individual retirement accounts, and any regulations adopted thereunder.
(D) Is the only homeownership savings account established by the qualified taxpayer.
(2) “Qualified homeownership savings expenses” means expenses, including a downpayment or closing costs, paid or incurred in connection with the purchase of a qualified taxpayer’s principal residence within the meaning of Section 121 of the Internal Revenue Code, relating to exclusion of gain from sale of principal residence, in this state for use by that qualified taxpayer who established the homeownership savings account.
(3) “Qualified taxpayer” means any individual, or individual’s spouse, who had no present ownership interest in a principal residence within the meaning of Section 121 of the Internal Revenue Code, relating to
exclusion of gain from sale of principal residence, during the preceding three-year period ending either on the date of the individual’s, or individual’s spouse’s, contribution to a homeownership savings account or on the date of the
individual’s, or individual’s spouse’s, purchase of the principal residence for which any amount is withdrawn from the individual’s, or individual’s spouse’s, homeownership savings account.
(4) “Trustee” shall have the same meaning as that term has under Section 408 of the Internal Revenue Code, relating to individual retirement accounts, and any regulations adopted thereunder.
(e) (1) For purposes of complying with Section 41, as it applies to the exclusion allowed by Section 17141.7 and the deduction allowed by this section, the Legislature finds and declares as follows:
(A) The specific goal, purpose, and objective of the exclusion and deduction is to provide assistance to those seeking
to save to buy a home. Home ownership is the key to a strong and healthy California but there is little state and federal assistance for first time home buyers.
(B) To measure whether the exclusion and the deduction achieve their intended purpose, the Franchise Tax Board shall prepare a written report on the following information, to the extent the information is available:
(i) The number of taxpayers allowed a deduction pursuant to this section.
(ii) The average amount of the deduction allowed.
(2) By May 1, 2026, and annually thereafter, the Franchise Tax Board shall provide the written report prepared pursuant to paragraph (1) to the Senate
Committee on Budget and Fiscal Review, the Assembly Committee on Budget, the Senate and Assembly Committees on Appropriations, the Senate Committee on Governance and Finance, and the Assembly Committee on Revenue and Taxation.
(3) The disclosure requirements of this subdivision shall be treated as exceptions to Section 19542.
(f) This section shall remain in effect only until December 1, 2029, and as of that date is repealed.
