Bill Text: IL HB1655 | 2019-2020 | 101st General Assembly | Introduced

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Bill Title: Creates the Illinois First-Time Homebuyer Savings Account Act. Provides that first-time homebuyers may open a first-time homebuyer savings account to pay or reimburse costs in connection with a qualified home purchase. Provides that the account holder shall not use any funds in a first-time homebuyer savings account to pay expenses of administering the account except for fees and charges assessed by the financial institution. Provides for reporting to the Department of Revenue. Defines terms. Amends the Illinois Income Tax Act. Provides that a taxpayer shall be allowed an annual credit for amounts deposited by the taxpayer into a first-time homebuyer savings account of up to $2,000 for individual taxpayers, and up to $4,000 for married taxpayers. Provides a maximum lifetime credit of 10 times the taxpayer's annual maximum deduction. Provides that beginning January 1, 2020, the Department shall adjust, every year, the maximum tax credits available to a first-time homebuyer savings account holder for inflation.

Spectrum: Bipartisan Bill

Status: (Introduced - Dead) 2019-03-29 - Rule 19(a) / Re-referred to Rules Committee [HB1655 Detail]

Download: Illinois-2019-HB1655-Introduced.html

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101ST GENERAL ASSEMBLY State of Illinois 2019 and 2020 HB1655 Introduced , by Rep. Tony McCombie SYNOPSIS AS INTRODUCED:
New Act
35 ILCS 5/229 new
Creates the Illinois First-Time Homebuyer Savings Account Act. Provides that first-time homebuyers may open a first-time homebuyer savings account to pay or reimburse costs in connection with a qualified home purchase. Provides that the account holder shall not use any funds in a first-time homebuyer savings account to pay expenses of administering the account except for fees and charges assessed by the financial institution. Provides for reporting to the Department of Revenue. Defines terms. Amends the Illinois Income Tax Act. Provides that a taxpayer shall be allowed an annual credit for amounts deposited by the taxpayer into a first-time homebuyer savings account of up to $2,000 for individual taxpayers, and up to $4,000 for married taxpayers. Provides a maximum lifetime credit of 10 times the taxpayer's annual maximum deduction. Provides that beginning January 1, 2020, the Department shall adjust, every year, the maximum tax credits available to a first-time homebuyer savings account holder for inflation.
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A BILL FOR
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AN ACT concerning revenue.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 1. Short title. This Act may be cited as the
Illinois First-Time Homebuyer Savings Account Act.
Section 5. Definitions. As used in this Act:
"Account holder" means an individual who establishes,
either individually or jointly with the individual's spouse, a
first-time homebuyer savings account under this Act.
"Department" means the Department of Revenue.
"Designated beneficiary" means an individual meeting the
requirements under this Act and designated by an account holder
as beneficiary of the account holder's first-time homebuyer
savings account.
"Eligible home costs" means the following: (1) the down
payment for the purchase of a single-family residence in
Illinois by a designated beneficiary; and (2) a cost, fee, tax,
or payment incurred by, or charged or assigned to, a designated
beneficiary for the purchase of a single-family residence in
Illinois, and listed on the statement of receipts and
disbursements for the sale, including any statement prescribed
by 12 C.F.R. 1026.38. "Eligible home costs" also includes any
United States Department of Veterans Affairs funding fee

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incurred by, or charged or assigned to, a designated
beneficiary in connection with a United States Department of
Veterans Affairs home loan guaranty program.
"Financial institution" means a State or federally
chartered bank, savings and loan association, credit union, or
trust company in this state.
"First-time homebuyer" means an individual who is a
resident of Illinois and who does not own, either individually
or jointly, a single-family or multifamily residence, and who
has not owned or purchased, either individually or jointly, a
single-family or multifamily residence for a period of 3 years
prior to either of the following: the date on which the
individual is named as a designated beneficiary of a first-time
homebuyer savings account; or the date of the qualified home
purchase for which the eligible home costs are paid or
reimbursed from a first-time homebuyer savings account.
"First-time homebuyer savings account" means an account
that meets the requirements under this Act and was established
for the purpose of paying or reimbursing a designated
beneficiary's eligible home costs in connection with a
qualified home purchase.
"Qualified home purchase" means, with respect to a
first-time homebuyer savings account, the purchase of a
single-family residence in Illinois by the account's
designated beneficiary 90 or more days after the date the
account holder first opened a first-time homebuyer savings

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account.
"Single-family residence" means a single-family residence
owned and occupied by a designated beneficiary as the
designated beneficiary's principal residence.
Section 10. First-time homebuyer savings account.
(a) Beginning January 1, 2020, an individual may open an
interest-bearing savings account with a financial institution
and designate the entire account as a first-time homebuyer
savings account for the purpose of paying or reimbursing a
designated beneficiary's eligible home costs in connection
with a qualified home purchase. The first-time homebuyer
savings account designation shall be made no later than April
30 of the year following the tax year during which the account
is opened, on forms provided by the Department.
(b) A married couple electing to file a joint Illinois
individual income tax return may establish a joint first-time
homebuyer savings account. Married taxpayers electing to file
separate tax returns or separately on a combined tax return for
Illinois tax purposes shall not establish or maintain a joint
first-time homebuyer savings account.
(c) An individual may establish more than one first-time
homebuyer savings account, provided each account has a
different designated beneficiary.
(d) The account holder shall designate one individual as
beneficiary of the first-time homebuyer savings account. The

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designation shall be made on forms provided by the Department
and no later than April 30 of the year following the tax year
during which the account is opened. The account holder may
change the designated beneficiary of the first-time homebuyer
savings account at any time.
(e) The account holder and designated beneficiary of a
first-time homebuyer savings account may be the same
individual. An individual may be the designated beneficiary of
more than one first-time homebuyer savings account. The
designated beneficiary of a first-time homebuyer savings
account must be a first-time homebuyer.
Section 15. Account administration; account holder
responsibilities.
(a) Contributions to a first-time homebuyer savings
account may be made by any person in the form of cash. There is
no limitation on the amount of contributions that may be made
to or retained in a first-time homebuyer savings account.
(b) The account holder shall not use funds held in a
first-time homebuyer savings account to pay expenses, if any,
of administering the account, except that all fees and charges
assessed by the financial institution may be deducted from the
account by the financial institution where the account is held.
(c) The account holder shall submit the following
information to the Department:
(1) An annual report for the first-time homebuyer

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savings account on forms furnished by the Department. The
report shall be filed with the Illinois income tax return
of the account holder. The report shall include: a list of
transactions occurring on the account during the tax year,
and shall identify any supporting documentation to be
included with the report or maintained by the taxpayer;
information regarding the eligible home costs to which any
withdrawn funds were applied in connection with a qualified
home purchase; information regarding the amount of funds
remaining, if any, in a first-time homebuyer savings
account; and such other information as the Department may
require by rule.
(2) A copy of the federal Internal Revenue Service form
1099, or other similar federal Internal Revenue Service
income reporting form, if any, issued for the first-time
homebuyer savings account to the account holder by the
financial institution where the account is held. The form
shall be included with the Illinois income tax return of
the account holder.
(3) Upon a withdrawal of funds from a first-time
homebuyer savings account, a transaction report on forms
furnished by the department.
(d) The account holder may withdraw funds from a first-time
homebuyer savings account at any time.
Section 20. Financial institution protections. Nothing in

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this Act shall be construed to require a financial institution
to do any of the following, or to make the financial
institution responsible or liable for any of the following:
(1) designate or label within the financial
institution's account contracts, systems, or in any other
manner, an account as a first-time homebuyer savings
account;
(2) ascertain or verify the purpose of a withdrawal of
funds from a first-time homebuyer savings account, or track
the destination or use of the withdrawn funds;
(3) allocate funds in a first-time homebuyer savings
account to a designated beneficiary or among joint account
holders;
(4) report any information to the Department or any
other governmental agency;
(5) determine or ensure that an account satisfies the
requirements to be a first-time homebuyer savings account;
(6) determine or ensure that funds withdrawn from a
first-time homebuyer savings account are used for the
payment or reimbursement of a designated beneficiary's
eligible home costs in connection with a qualified home
purchase;
(7) report or remit taxes or penalties related to the
ownership or use of a first-time homebuyer savings account;
or
(8) include the name of a beneficiary in the title of a

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first-time homebuyer savings account, or document the
change of any beneficiary to a first-time homebuyer savings
account.
Section 25. Tax treatment. A first-time homebuyer savings
account shall be taxable as provided in the Illinois Income Tax
Act.
Section 30. Rulemaking; forms.
(a) The Department, in consultation with the Department of
Financial and Professional Regulation, shall adopt rules
necessary to implement and administer this Act.
(b) The Department shall create and make available forms to
be used in complying with this Act, including, but not limited
to, the following forms: for designating an account as a
first-time homebuyer savings account; for designating an
individual as beneficiary of a first-time homebuyer savings
account; and a first-time homebuyer savings account annual
report as required under subsection (c) of Section 15.
Section 900. The Illinois Income Tax Act is amended by
adding Section 229 as follows:
(35 ILCS 5/229 new)
Sec. 229. Illinois First-Time Homebuyer Savings Account
credit.

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(a) For taxable years beginning on and after January 1,
2020, a taxpayer shall be allowed a credit for amounts
deposited by the taxpayer during the taxable year into a
first-time homebuyer savings account under the Illinois
First-Time Homebuyer Savings Account Act, together with any
interest earned during the taxable year on such an account. For
single filers and married persons filing separately, the credit
shall not exceed $2,000 per year; for married persons filing
jointly, the credit shall not exceed $4,000 per year. The
maximum amount of credit provided to a taxpayer shall not
exceed 10 times the taxpayer's annual deduction limit in the
first year of eligibility.
(b) On January 1, 2022, and January 1 of each year
thereafter, the maximum credits established in subsection (a)
shall be adjusted by the Department for inflation as determined
by the Consumer Price Index for All Urban Consumers as
published by the United States Department of Labor and rounded
to the nearest $100.
(c) The credit may not be carried back and may not reduce
the taxpayer's liability to less than zero. If the amount of
the credit exceeds the tax liability for the year, the excess
may be carried forward and applied to the tax liability of the
5 taxable years following the excess credit year. The tax
credit shall be applied to the earliest year for which there is
a tax liability. If there are credits for more than one year
that are available to offset a liability, the earlier credit

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shall be applied first.
(d) This Section is exempt from the provisions of Section
250.