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AB-1590 Personal income tax: credit: qualified first-time homebuyer.(2019-2020)

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Date Published: 09/12/2019 09:00 PM
AB1590:v94#DOCUMENT

Enrolled  September 12, 2019
Passed  IN  Senate  September 05, 2019
Passed  IN  Assembly  September 09, 2019
Amended  IN  Senate  August 30, 2019
Amended  IN  Senate  June 24, 2019
Amended  IN  Assembly  May 07, 2019
Amended  IN  Assembly  March 28, 2019

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Assembly Bill
No. 1590

Introduced by Assembly Member Blanca Rubio
(Coauthor: Assembly Member Ramos)

February 22, 2019

An act to add and repeal Section 17060 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.


LEGISLATIVE COUNSEL'S DIGEST


AB 1590, Blanca Rubio. Personal income tax: credit: qualified first-time homebuyer.
The Personal Income Tax Law allows various credits against the taxes imposed by those laws.
This bill would allow a credit against that tax for each taxable year beginning on or after January 1, 2020, and before January 1, 2023, in an amount equal to the lesser of 3 percent of the purchase price of the qualified principal residence, as defined, or $5,000. The bill would also provide that the credit amount is $0 for each taxable year beginning on or after January 1, 2020, and before January 1, 2025, unless otherwise specified in a bill providing for appropriations related to the Budget Act. The bill would require the qualified first-time homebuyer, as defined, and seller of the qualified principal residence to jointly sign and submit to the Franchise Tax Board a certification under the penalty of perjury that they have entered into an enforceable contract for the purchase of the qualified principal residence. By expanding the scope of the crime of perjury, this bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
This bill would take effect immediately as a tax levy.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: YES  

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


SECTION 1.

 Section 17060 is added to the Revenue and Taxation Code, to read:

17060.
 (a) (1) In the case of any qualified first-time homebuyer who purchases a qualified principal residence on or after January 1, 2020, and before January 1, 2023, there shall be allowed a credit against the “net tax,” as defined in Section 17039, in an amount equal to the lesser of 3 percent of the purchase price of the qualified principal residence or five thousand dollars ($5,000).
(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.
(4) A qualified principal residence is purchased on the date on which escrow closes with respect to the purchase of the qualified principal residence.
(b) For purposes of this section:
(1) “Qualified first-time homebuyer” means any individual, or individual’s spouse, who has never had an ownership interest in a principal residence and qualifies as “persons and families of low or moderate income” as defined by Section 50093 of the Health and Safety Code.
(2) “Qualified principal residence” means a single-family residence, whether detached or attached, that is purchased to be the principal residence of the qualified first-time homebuyer for a minimum of two years and is eligible for the homeowner’s exemption under Section 218.
(3) “Area median income” has the same meaning as defined in subdivision (c) of Section 50093 of the Health and Safety Code.
(c) (1) (A) A qualified first-time homebuyer may, but is not required to, reserve a credit prior to close of escrow for the purchase of a qualified principal residence. To reserve a credit, the qualified first-time homebuyer and seller of the qualified principal residence shall jointly sign and submit to the Franchise Tax Board a certification under penalty of perjury that they have entered into an enforceable contract on or after January 1, 2020, and before January 1, 2023. Upon receipt of the joint certification, the Franchise Tax Board shall notify the qualified first-time homebuyer that the board has reserved the credit for the qualified first-time homebuyer.
(B) The reservation of a credit shall be canceled if a qualified first-time homebuyer does not provide the information required under paragraph (2).
(2) A credit shall not be allowed under this section unless the qualified first-time homebuyer submits to the Franchise Tax Board, within two weeks after the date of the purchase of the qualified principal residence, a copy of the properly executed settlement statement and a certification from the qualified first-time homebuyer that they are a qualified first-time homebuyer, as defined in paragraph (1) of subdivision (b).
(d) (1) If the qualified first-time homebuyer does not occupy the qualified principal residence as their principal residence for at least two years immediately following the purchase, the credit shall be recaptured, and the qualified first-time homebuyer shall be liable for tax in the amount of any credit allowed under this section on previous tax returns.
(2) Any recapture of a credit shall be treated as a mathematical error appearing on the return. Any amount of tax resulting from that recapture shall be assessed by the Franchise Tax Board in the same manner as provided by Section 19051. The amount of tax resulting from the recapture shall be added to the tax otherwise due by the qualified first-time homebuyer for the taxable year in which the Franchise Tax Board’s recapture determination occurred.
(e) (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 five thousand dollars ($5,000).
(f) The total amount of credit that may be allowed pursuant to this section shall not exceed fifty million dollars ($50,000,000).
(g) (1) The Franchise Tax Board shall allocate the credit to qualified first-time homebuyers on a first-come-first-served basis.
(2) The qualified first-time homebuyer shall claim the credit on a timely filed original return.
(3) If the information described in subdivision (c) is received from two or more qualified first-time homebuyers 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.
(4) The date the information described in subdivision (c) is received shall be determined by the Franchise Tax Board.
(5) (A) The determination of the Franchise Tax Board with respect to the date the information described in subdivision (c) is received, the allocation and reservation of the credit, and whether a return has been timely filed for purposes of this section, may not be reviewed in any administrative or judicial proceeding.
(B) Any disallowance of a credit claimed due to a determination under this section 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 their spouse, is related to the seller within the meaning of Section 267 of the Internal Revenue Code, relating 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) This section shall remain in effect only until December 1, 2026, and as of that date is repealed.
(l) Unless otherwise specified in any bill providing for appropriations related to the Budget Act, for taxable years beginning on or after January 1, 2020, and before January 1, 2025, the amount of credit allowed pursuant to this section shall be zero dollars ($0).

SEC. 2.

 For the purposes of complying with Section 41 of the Revenue and Taxation Code, the Legislature finds and declares all of the following with respect to Section 17060 of the Revenue and Taxation Code:
(a) The tax credit allowed under Section 17060 shall achieve the following goals, purposes, and objectives:
(1) To assist qualified first-time homebuyers, as defined in paragraph (1) of subdivision (b) of Section 17060 of the Revenue and Taxation Code.
(2) To help mitigate the negative effects of the state’s affordable housing crisis.
(b) The Legislature shall use the following detailed performance indicators for measuring whether the tax credit meets those specific goals, purposes, and objectives:
(1) The number of qualified first-time homebuyers, as defined in paragraph (1) of subdivision (b) of Section 17060 of the Revenue and Taxation Code, that claimed a credit.
(2) The amount of tax credits used by qualified first-time homebuyers, as defined in paragraph (1) of subdivision (b) of Section 17060 of the Revenue and Taxation Code, categorized into the following categories:
(A) Extremely low income, which means 0 percent to 30 percent of area median income.
(B) Very low income, which means 30 percent to 50 percent of area median income.
(C) Low income, which means 50 percent to 80 percent of area median income.
(D) Moderate income, which means 80 percent to 120 percent of area median income.
(3) The amount of tax credits used by geographic location, categorized in the following manner:
(A) Census Tract.
(B) County.
(C) City.
(D) Zip Code.
(c) The following requirements shall enable the Legislature to determine whether the tax credit is meeting, failing to meet, or exceeding those specific goals, purposes, and objectives:
(1) The Legislative Analyst shall review the effectiveness of the tax credits and may request information from the Franchise Tax Board and any state governmental entity with authority relating to the implementation of housing policy.
(2) The Franchise Tax Board and any state governmental entity with authority relating to the implementation of housing policy shall provide to the Legislative Analyst any data requested by the Legislative Analyst pursuant to this subdivision.

SEC. 3.

 No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.

SEC. 4.

 This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect.