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SB-1149 Personal income taxes: credit: principal residence.(2015-2016)

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Amended  IN  Senate  June 15, 2016
Amended  IN  Senate  June 01, 2016
Amended  IN  Senate  May 02, 2016

CALIFORNIA LEGISLATURE— 2015–2016 REGULAR SESSION

Senate Bill No. 1149


Introduced by Senator Stone

February 18, 2016


An act to add 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: credit: principal residence.
The Personal Income Tax Law allows various credits against the taxes imposed by that law.
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   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)

(c) (1) 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)

(2) 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) (2) 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.