Bill Text: CA AB1317 | 2019-2020 | Regular Session | Amended

California Assembly Bill 1317 (Prior Session Legislation)

NOTE: There are more recent revisions of this legislation. Read Latest Draft

Bill Title: Personal income taxes: gross income exclusion: homeownership savings accounts.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Failed) 2020-02-03 - From committee: Filed with the Chief Clerk pursuant to Joint Rule 56. [AB1317 Detail]

Download: California-2019-AB1317-Amended.html

Amended IN Assembly April 30, 2019

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Assembly Bill

No. 1317

Introduced by Assembly Member Brough

February 22, 2019

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

LEGISLATIVE COUNSEL'S DIGEST

AB 1317, as amended, Brough. 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, on or after January 1, 2019, would exclude from gross income any income earned on the moneys contributed to a homeownership savings account, ~~as described.~~ subject to specified restrictions, including that the account is designated as a homeownership savings account by the trustee for the benefit of a qualified taxpayer, as defined, and that the account is closed once the purchase of the qualified taxpayer’s principal residence is complete.

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 taxable years beginning on or after January 1, 2019, gross income does not include any income earned during the taxable year to 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.~~ qualified taxpayer.

(B) Is established by a ~~person, or by persons who are spouses,~~ qualified taxpayer 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 websites.

(ii) The account is established to pay, pursuant to the requirements and limitations of this section, for qualified homeownership savings expenses of the ~~person~~ qualified taxpayer 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~~ qualified taxpayer 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 website, 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, 2019, and each January 1 thereafter.

(F) Is established by a qualified taxpayer whose gross income, for the taxable year in which the account is established, does not exceed 80 percent of the area median income of a city and county. A qualified taxpayer shall contribute to a homeownership savings account only in the taxable years in which the qualified taxpayer’s gross income does not exceed 80 percent of the area median income of a city and county.
(G) Is closed once the purchase of a principal residence within the meaning of Section 121 of the Internal Revenue Code, relating to exclusion of gain from sale of principal residence, is complete.
(2)“Person” means any individual, or individual’s spouse, who had no present 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, during the preceding three-year period ending either on the date the homeownership savings account is established or on the date of the individual’s, or individual’s spouse’s, purchase of the principal residence for which any amount is withdrawn from the homeownership savings account.
~~(3)~~

(2) “Qualified homeownership savings expenses” means ~~expenses, including a downpayment or closing costs,~~ the downpayment and closing costs paid or incurred in connection with the purchase of a ~~person’s~~ qualified taxpayer’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~~ qualified taxpayer who is the beneficiary of the homeownership savings account.

(3) “Qualified taxpayer” means any individual, individual’s spouse, or individuals who are spouses filing jointly, who have 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.

(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.