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AB-1979 Personal income taxes: gross income exclusion: homeownership savings accounts.(2017-2018)

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Date Published: 05/09/2018 09:00 PM
AB1979:v97#DOCUMENT

Amended  IN  Assembly  May 09, 2018
Amended  IN  Assembly  April 17, 2018

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Assembly Bill No. 1979


Introduced by Assembly Members Bonta and Steinorth

January 31, 2018


An act to add and repeal Section 17141.5 to of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.


LEGISLATIVE COUNSEL'S DIGEST


AB 1979, as amended, Bonta. Personal income taxes: gross income exclusion: homeownership savings accounts.
The Personal Income Tax Law, in modified conformity with federal income tax laws, allows various exclusions from gross income.
This bill, for taxable years beginning on or after January 1, 2018, and before January 1, 2023, would exclude from gross income any income earned on the moneys contributed to a homeownership savings account, as described.
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 17141.5 is added to the Revenue and Taxation Code, to read:

17141.5.
 (a) For each taxable year beginning on or after January 1, 2018, and before January 1, 2023, 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 earned during the taxable year on a homeownership savings account.
(b) 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 for the benefit of any person.
(B) Is established by a person, or by persons who are spouses, where the written governing instrument creating the account provides for the following:
(i) All contributions to the account are required to be in cash, including any refunds of taxes paid, and can be made by any person, including, but not limited to, contributions from relatives, employers, or crowdfunding Internet Web sites.
(ii)   The account is established to pay, pursuant to the requirements and limitations of this section, for qualified homeownership savings expenses of the person who is the beneficiary of 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 person or spouses who established the account.
(E) The balance of the homeownership savings account does not exceed the maximum balance established for the account. The maximum balance of a homeownership savings account shall be 20 percent of the median home value within the state, as determined by the Department of Housing and Community Development and posted on its Internet Web site, for the year in which the account is created. The Department of Housing and Community Development shall post the annual median home value on or before January 1 annually.
(F) Is closed once the purchase of a principal residence is completed.
(2) “Person” means any individual, or individual’s spouse, who has never had an 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, and whose gross income for the taxable year in which the account was created and any taxable year in which a contribution is made does not exceed 120 percent of the area median income.
(3) “Qualified homeownership savings expenses” means a downpayment or closing costs paid or incurred in connection with the purchase of a person’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 the person who is the beneficiary of the 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.
(c) 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.