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AB-1932 Personal income tax: mortgage interest deduction.(2023-2024)

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Date Published: 04/03/2024 09:00 PM
AB1932:v98#DOCUMENT

Amended  IN  Assembly  April 03, 2024

CALIFORNIA LEGISLATURE— 2023–2024 REGULAR SESSION

Assembly Bill
No. 1932

Introduced by Assembly Member Ward
(Coauthors: Assembly Members Juan Carrillo, Lee, and Low)

January 25, 2024

An act to amend Section 50422 of the Health and Safety Code, relating to housing. An act to add Part 3.5 (commencing with Section 51550) to Division 31 of the Health and Safety Code, and to add Section 17225.5 to the Revenue and Taxation Code, relating to housing, and making an appropriation therefor.


LEGISLATIVE COUNSEL'S DIGEST


AB 1932, as amended, Ward. California Statewide Housing Plan. Personal income tax: mortgage interest deduction.
The Personal Income Tax Law allows various deductions in computing the income that is subject to the taxes imposed by that law, including, in modified conformity with federal income tax laws, a deduction for a limited amount of interest paid on acquisition indebtedness, as defined, with respect to a qualified residence of the taxpayer. Existing law limits the aggregate amount treated as acquisition indebtedness for these purposes to $1,000,000, or $500,000 in the case of a married individual filing a separate return. Existing law specifies for these purposes that a qualified residence includes the taxpayer’s principal residence and one other residence selected by the taxpayer, as provided.
This bill, for taxable years beginning on or after January 1, 2025, would disallow the deduction of acquisition indebtedness with respect to a qualified residence of a taxpayer other than the principal residence.
This bill would require the Franchise Tax Board, in consultation with the Department of Finance, to estimate the amount of additional revenue resulting from the above-described modifications made with respect to the calculation of taxable income under the Personal Income Tax Law by this bill and to notify the Controller of that amount, as provided.
The bill would establish the continuously appropriated Housing, Homeownership, and Homelessness Prevention Response Fund in the State Treasury, and would direct the Controller to transfer an amount from the General Fund to that fund equal to the above-described estimates. The bill would require the moneys be used for housing purposes, as specified. By establishing a continuously appropriated fund, this bill would make an appropriation.
This bill would include a change in state statute that would result in a taxpayer paying a higher tax within the meaning of Section 3 of Article XIII A of the California Constitution, and thus would require for passage the approval of 2/3 of the membership of each house of the Legislature.

Existing law establishes the California Statewide Housing Plan, developed in cooperation with the private housing industry, regional and local housing and planning agencies, and other agencies of the state, to serve as a state housing plan. Existing law requires the plan to incorporate specified segments, including a review of housing assistance policies, goals, and objectives affecting the homeless.

This bill would recast that provision to require the plan to incorporate, in consultation with the Interagency Council on Homelessness and utilizing data from the Homeless Data Integration system, a review of housing assistance, policies, goals, and objectives affecting people experiencing homelessness.

Vote: MAJORITY2/3   Appropriation: NOYES   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Part 3.5 (commencing with Section 51550) is added to Division 31 of the Health and Safety Code, to read:

PART 3.5. Housing, Homeownership, and Homelessness Prevention Response Fund

51550.
 (a) The Housing, Homeownership, and Homelessness Prevention Response Fund is established in the State Treasury.
(b) Upon receiving the notifications from the Franchise Tax Board pursuant to paragraphs (1) and (2) of subdivision (b) of Section 17225.5 of the Revenue and Taxation Code, the Controller shall transfer an amount, equal to the amount estimated by the Franchise Tax Board in those notifications, from the General Fund to the Housing, Homeownership, and Homelessness Prevention Response Fund.
(c) Notwithstanding Section 13340 of the Government Code, moneys in the Housing, Homeownership, and Homelessness Prevention Response Fund are hereby continuously appropriated, without regard to fiscal year, as follows:
(1) Fifty percent of the moneys shall be used in accordance with the Multifamily Housing Program (Chapter 6.7 (commencing with Section 50675) of Part 2).
(2) Twenty-five percent of the moneys shall be used for supporting homeownership opportunities for first-time homebuyers.
(3) Twenty-five percent of the moneys shall be used for distribution to local public housing authorities to provide housing navigation services and landlord incentives for housing voucher recipients.

SEC. 2.

 Section 17225.5 is added to the Revenue and Taxation Code, to read:

17225.5.
 (a) For taxable years beginning on or after January 1, 2025, Sections 163(h)(4)(A)(i)(II) and 163(h)(4)(A)(ii)(II) of the Internal Revenue Code, relating to qualified residence, shall not apply.
(b) (1) No later than June 1, 2025, the Franchise Tax Board, in consultation with the Department of Finance, shall estimate the amount of revenue that would have resulted if the modifications made with respect to the calculation of taxable income by this section had applied to taxable years beginning on or after January 1, 2024, and before January 1, 2025, and notify the Controller of that amount.
(2) No later than June 1, 2026, and annually thereafter, the Franchise Tax Board, in consultation with the Department of Finance, shall estimate the amount of additional revenue resulting from the modifications made with respect to the calculation of taxable income by this section for the taxable years beginning on or after January 1 of the calendar year immediately preceding the year in which the estimate is made and before January 1 of the calendar year in which the estimate is made and notify the Controller of that amount.

SECTION 1.Section 50422 of the Health and Safety Code is amended to read:
50422.

The plan shall incorporate a statement of housing goals, policies, and objectives, as well as all of the following segments:

(a)An evaluation and summary of housing conditions throughout the state, with particular emphasis upon the availability of housing for all economic segments of the state. The evaluation shall include summary statistics for all counties, all multicounty metropolitan areas, and rural areas, as defined and designated by the Bureau of the Census of the United States Department of Commerce, rather than as defined in Section 50101. The evaluation shall include the existing distribution of housing by type, size, gross rent, value, and, to the extent data is available, condition, and the existing distribution of households by gross income, size, and ethnic character for each of those areas.

(b)A determination of the statewide need for housing development for the plan period. The determination of statewide need shall be established as the minimum number of units necessary to be built or rehabilitated in order to provide sufficient housing to house all residents of the state in standard, uncrowded units in suitable locations.

(c)Goals for the provision of housing assistance for the plan period. The goals shall be established as the minimum number of households to be assisted that will result in achieving, by the fourth subsequent year, a substantial reduction in the number of very low income households and other persons and families of low or moderate income constrained to pay more than 30 percent of their gross income for housing. Income groups to be considered in establishing the goals shall be designated by the department and shall include households a significant number of which are required to pay more than 30 percent of their gross income for housing in the fiscal year the plan is revised, as determined by the department.

(d)An identification of governmental and nongovernmental constraints and obstacles and specific recommendations for their removal.

(e)An analysis of state and local housing and building codes and their enforcement. The analysis shall include consideration of whether those codes contain sufficient flexibility to respond to new methods of construction and new materials.

(f)Recommendations for actions by federal, state, and local governments and the private sector that will contribute to the attainment of the housing goals established for California.

(g)A housing strategy that coordinates the housing assistance and activities of state and local agencies, including the provision of housing assistance for various population groups, including, but not limited to, elderly persons, persons with disabilities, veterans, large families, families where a female is the head of the household, farmworker households, and other specific population groups as deemed appropriate by the department. To inform the strategy, the department shall, to the extent possible, do the following:

(1)Consider information compiled by relevant state and local agencies on aging, and from provider and consumer organizations as available.

(2)Consult with various state departments, including the California Department of Aging, the State Department of Social Services, the State Department of Health Care Services, the Employment Development Department, the State Department of Developmental Services, the Department of Veterans Affairs, and other state departments or agencies to obtain information deemed relevant to the housing needs of populations addressed in the housing strategy. This paragraph shall not be construed to require activity beyond the customary scope of the department’s planning process.

(h)In consultation with the Interagency Council on Homelessness and utilizing data from the Homeless Data Integration System required by paragraph (13) of subdivision (b) of Section 8257 of the Welfare and Institutions Code, a review of housing assistance policies, goals, and objectives affecting people experiencing homelessness.