Bill Text: IA SSB1170 | 2015-2016 | 86th General Assembly | Introduced
Bill Title: A study bill for an act providing for the creation of first=time homebuyer savings accounts in Iowa, including related individual income tax exemptions, making penalties applicable, and including effective date and applicability provisions.
Spectrum: Unknown
Status: (Introduced - Dead) 2015-03-04 - Voted - State Government. [SSB1170 Detail]
Download: Iowa-2015-SSB1170-Introduced.html
Senate
Study
Bill
1170
-
Introduced
SENATE
FILE
_____
BY
(PROPOSED
COMMITTEE
ON
STATE
GOVERNMENT
BILL
BY
CHAIRPERSON
DANIELSON)
A
BILL
FOR
An
Act
providing
for
the
creation
of
first-time
homebuyer
1
savings
accounts
in
Iowa,
including
related
individual
2
income
tax
exemptions,
making
penalties
applicable,
and
3
including
effective
date
and
applicability
provisions.
4
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
5
TLSB
2200SC
(3)
86
mm/sc
S.F.
_____
Section
1.
NEW
SECTION
.
12I.1
Short
title.
1
This
chapter
may
be
cited
as
the
“Iowa
First-time
Homebuyer
2
Savings
Account
Act”
.
3
Sec.
2.
NEW
SECTION
.
12I.2
Definitions.
4
As
used
in
this
chapter,
unless
the
context
otherwise
5
requires:
6
1.
“Account
holder”
means
a
first-time
homebuyer
who
is
a
7
resident
of
this
state
and
who
establishes,
either
individually
8
or
jointly
with
the
resident’s
spouse
who
is
also
a
first-time
9
homebuyer,
a
first-time
homebuyer
savings
account.
A
person
10
ceases
to
be
an
account
holder
following
the
purchase
of
a
11
principal
residence
after
the
establishment
of
a
first-time
12
homebuyer
savings
account.
13
2.
“Business
day”
means
a
day
other
than
a
Saturday,
Sunday,
14
or
federal
holiday.
15
3.
“Eligible
costs”
means
the
down
payment
and
allowable
16
closing
costs
for
the
purchase
of
a
principal
residence
in
Iowa
17
which
principal
residence
is
purchased
after
the
establishment
18
of
the
first-time
homebuyer
savings
account.
19
4.
“First-time
homebuyer”
means
an
individual
who
has
never
20
owned
or
purchased
under
contract
for
deed,
either
individually
21
or
jointly,
a
single-family,
owner-occupied
residence,
22
including
but
not
limited
to
a
manufactured
or
mobile
home
that
23
is
assessed
and
taxed
as
real
estate
or
taxed
under
chapter
24
435
or
taxed
under
other
similar
law
of
another
state,
or
a
25
condominium
unit.
26
5.
“First-time
homebuyer
savings
account”
means
an
account
27
established
with
a
state
or
federally
chartered
bank,
savings
28
and
loan
association,
credit
union,
or
trust
company
in
this
29
state
to
finance
the
purchase
of
a
principal
residence
in
this
30
state.
31
6.
“Principal
residence”
means
a
single-family,
32
owner-occupied
residence
in
the
state
that
will
be
the
33
principal
place
of
residence
of
the
account
holder,
whether
34
owned
or
purchased
under
contract
for
deed
by
the
account
35
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_____
holder,
individually
or
jointly.
“Principal
residence”
includes
1
but
is
not
limited
to
a
manufactured
home
or
mobile
home
that
2
is
assessed
and
taxed
as
real
estate
or
taxed
under
chapter
3
435,
and
a
condominium
unit.
4
7.
“Resident”
means
the
same
as
defined
in
section
422.4.
5
Sec.
3.
NEW
SECTION
.
12I.3
First-time
homebuyer
savings
6
account.
7
1.
Establishment.
8
a.
A
first-time
homebuyer
who
is
a
resident
of
this
9
state
may
establish,
either
individually
or
jointly
with
10
the
resident’s
spouse
who
is
also
a
first-time
homebuyer,
a
11
first-time
homebuyer
savings
account
to
finance
the
purchase
12
of
a
principal
residence.
Married
taxpayers
electing
to
file
13
separate
tax
returns
or
separately
on
a
combined
tax
return
14
shall
not
establish
or
maintain
a
joint
first-time
homebuyer
15
savings
account.
16
b.
The
account
holder
who
establishes
the
first-time
17
homebuyer
savings
account,
individually
or
jointly,
is
the
18
owner
and
administrator
of
the
account.
19
c.
A
first-time
homebuyer
savings
account
shall
be
an
20
interest-bearing
savings
account.
21
d.
A
financial
institution
shall
not
be
responsible
for
22
the
use
or
application
of
funds
within
a
first-time
homebuyer
23
savings
account
solely
because
the
account
is
held
at
that
24
financial
institution.
25
2.
Use
and
administration
by
account
holder.
26
a.
The
account
holder
shall
use
the
money
in
the
first-time
27
homebuyer
savings
account
for
eligible
costs
related
to
the
28
purchase
of
a
principal
residence
within
ten
years
following
29
the
year
in
which
the
account
is
first
established.
30
b.
An
account
holder
shall
not
contribute
to
a
first-time
31
homebuyer
savings
account
for
a
period
exceeding
ten
years.
32
c.
There
is
no
limitation
on
the
amount
of
contributions
33
that
may
be
made
to
or
retained
in
a
first-time
homebuyer
34
savings
account.
35
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8
S.F.
_____
d.
The
account
holder
shall
not
use
funds
held
in
a
1
first-time
homebuyer
savings
account
to
pay
expenses,
if
any,
2
of
administering
the
account,
except
that
a
service
fee
may
be
3
charged
to
the
account
by
the
financial
institution
where
the
4
account
is
held.
5
e.
Documentation
regarding
the
segregation
of
funds
in
6
a
first-time
homebuyer
savings
account
from
other
funds
and
7
documentation
regarding
eligible
costs
for
the
purchase
of
a
8
principal
residence
shall
be
maintained
by
the
account
holder.
9
The
burden
of
proving
that
a
withdrawal
from
a
first-time
10
homebuyer
savings
account
was
made
for
eligible
costs
is
upon
11
the
account
holder.
12
f.
Within
thirty
days
of
being
furnished
proof
of
death
13
of
the
account
holder,
the
financial
institution
where
14
the
first-time
homebuyer
savings
account
is
held
shall
15
distribute
any
amount
remaining
in
the
first-time
homebuyer
16
savings
account
to
the
estate
of
the
account
holder
or
to
a
17
transfer
on
death
or
pay
on
death
beneficiary
of
the
account
18
properly
designated
by
the
account
holder
with
the
financial
19
institution.
20
g.
The
account
holder
shall
file
reports
with
the
department
21
of
revenue
as
reasonably
required
by
the
department
of
revenue.
22
h.
The
account
holder
is
required
to
remit
the
withdrawal
23
penalty
in
section
422.7,
subsection
57,
paragraph
“c”
,
if
24
assessed,
to
the
department
of
revenue
in
the
same
manner
as
25
provided
in
section
422.16,
subsection
2.
26
3.
Penalties.
A
person
who
knowingly
prepares
or
causes
to
27
be
prepared
a
false
claim,
statement,
or
billing
to
justify
the
28
withdrawal
of
money
from
a
first-time
homebuyer
savings
account
29
is
guilty
of
a
serious
misdemeanor
for
each
violation.
30
Sec.
4.
NEW
SECTION
.
12I.4
Tax
considerations.
31
The
state
income
tax
treatment
of
a
first-time
homebuyer
32
savings
account
shall
be
as
provided
in
section
422.7,
33
subsection
57.
34
Sec.
5.
NEW
SECTION
.
12I.5
Rules.
35
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8
S.F.
_____
The
director
of
revenue
and
the
treasurer
of
state
shall
1
each
adopt
rules
to
jointly
implement
and
administer
this
2
chapter.
3
Sec.
6.
Section
422.7,
Code
2015,
is
amended
by
adding
the
4
following
new
subsection:
5
NEW
SUBSECTION
.
57.
a.
Subtract
the
amount
of
6
contributions
made
by
an
account
holder
to
the
account
holder’s
7
first-time
homebuyer
savings
account
during
the
tax
year,
not
8
to
exceed
three
thousand
dollars
per
individual
per
tax
year,
9
or
six
thousand
dollars
per
tax
year
for
a
married
couple
who
10
have
a
joint
first-time
homebuyer
savings
account
and
file
a
11
joint
return.
An
amount
of
contributions
made
during
a
tax
12
year
in
excess
of
three
thousand
dollars,
or
six
thousand
13
dollars,
as
applicable,
may
be
subtracted
by
an
account
holder
14
in
a
subsequent
tax
year,
provided
the
total
exemption
under
15
this
paragraph
for
the
subsequent
tax
year
does
not
exceed
16
three
thousand
dollars,
or
six
thousand
dollars,
as
applicable.
17
This
paragraph
shall
not
apply
to
an
account
holder
more
18
than
ten
years
after
the
account
holder
first
establishes
a
19
first-time
homebuyer
savings
account.
20
b.
Subtract,
to
the
extent
included,
income
from
interest
21
and
earnings
received
from
an
account
holder’s
first-time
22
homebuyer
savings
account.
This
paragraph
“b”
shall
not
apply
23
to
any
interest
and
earnings
received
by
an
account
holder
more
24
than
ten
years
after
the
account
holder
first
establishes
a
25
first-time
homebuyer
savings
account.
26
c.
(1)
Add,
to
the
extent
previously
subtracted
under
27
paragraph
“a”
,
the
amount
resulting
from
a
withdrawal
made
from
28
a
first-time
homebuyer
savings
account
for
purposes
other
than
29
the
payment
of
eligible
costs
of
the
account
holder.
If
the
30
withdrawal
is
made
on
a
day
other
than
the
last
business
day
31
of
the
calendar
year,
such
withdrawal
shall
also
be
assessed
a
32
penalty
in
an
amount
equal
to
ten
percent
of
the
amount
of
the
33
withdrawal.
The
penalty
shall
not
apply
to
withdrawals
made
on
34
account
of
the
death
of
the
account
holder.
35
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_____
(2)
For
purposes
of
this
paragraph
“c”
,
any
amount
remaining
1
in
a
first-time
homebuyer
savings
account
of
an
account
holder
2
on
the
day
after
the
purchase
of
a
principal
residence
or
the
3
last
business
day
of
the
tenth
calendar
year
following
the
4
calendar
year
in
which
the
account
holder
first
establishes
a
5
first-time
homebuyer
savings
account,
whichever
occurs
first,
6
shall
be
considered
a
withdrawal
under
subparagraph
(1).
7
(3)
For
purposes
of
this
paragraph
“c”
,
the
following
shall
8
not
be
considered
a
withdrawal
under
subparagraph
(1):
9
(a)
Any
amount
transferred
between
different
first-time
10
homebuyer
savings
accounts
of
the
same
account
holder
by
a
11
person
other
than
the
account
holder.
12
(b)
Any
amounts
withdrawn
or
otherwise
transferred
from
a
13
first-time
homebuyer
savings
account
pursuant
to
an
order
in
14
bankruptcy.
15
d.
For
purposes
of
this
subsection,
“account
holder”
,
16
“business
day”
,
“eligible
costs”
,
and
“first-time
homebuyer
17
savings
account”
all
mean
the
same
as
defined
in
section
12I.2.
18
Sec.
7.
EFFECTIVE
DATE.
This
Act
takes
effect
January
1,
19
2016.
20
Sec.
8.
APPLICABILITY.
This
Act
applies
to
tax
years
21
beginning
on
or
after
January
1,
2016.
22
EXPLANATION
23
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
24
the
explanation’s
substance
by
the
members
of
the
general
assembly.
25
This
bill
allows
first-time
homebuyers
who
are
residents
26
of
Iowa
to
establish
a
first-time
homebuyer
savings
account
27
(account)
with
a
state
or
federally
chartered
bank,
savings
and
28
loan
association,
credit
union,
or
trust
company
in
this
state
29
to
finance
the
purchase
of
a
principal
residence
in
this
state.
30
“First-time
homebuyer”
and
“principal
residence”
are
defined
in
31
the
bill.
The
account
is
required
to
be
an
interest-bearing
32
savings
account.
The
account
may
be
established
individually
33
or
jointly
with
the
resident’s
spouse.
However,
married
34
taxpayers
electing
to
file
separate
tax
returns
or
separately
35
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2200SC
(3)
86
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8
S.F.
_____
on
a
combined
tax
return
shall
not
establish
or
maintain
a
1
joint
account.
2
There
is
no
limitation
on
the
amount
of
contributions
that
3
may
be
made
to
or
retained
in
a
first-time
homebuyer
savings
4
account.
An
account
holder
is
required
to
use
the
funds
in
5
an
account
for
eligible
costs
related
to
the
purchase
of
a
6
principal
residence
within
10
years
following
the
year
in
which
7
the
account
is
first
established.
8
“Eligible
costs”
are
defined
in
the
bill
and
include
the
down
9
payment
and
allowable
closing
costs
of
a
principal
residence
10
that
was
purchased
after
the
establishment
of
the
account.
If
11
the
account
holder
withdraws
funds
for
any
purpose
other
than
12
the
payment
of
eligible
costs,
the
account
holder
is
subject
13
to
a
penalty
equal
to
10
percent
of
the
withdrawal,
unless
the
14
withdrawal
occurs
on
the
last
business
day
of
the
calendar
year
15
or
was
because
of
the
death
of
the
account
holder.
The
penalty
16
amounts
are
required
to
be
remitted
by
the
account
holder
to
17
the
department
of
revenue
in
the
same
manner
as
Code
section
18
422.16(2),
relating
to
the
withholding
of
income
tax.
A
person
19
ceases
to
be
an
account
holder
following
the
purchase
of
a
20
principal
residence
after
the
establishment
of
an
account.
21
Accounts
are
required
to
be
administered
by
the
account
22
holder.
The
bill
prohibits
the
account
holder
from
using
23
account
funds
to
pay
administrative
expenses
of
the
account,
24
but
the
bill
does
allow
a
financial
institution
where
the
25
account
is
held
to
charge
a
service
fee.
Documentation
26
regarding
the
segregation
of
funds
in
the
account
from
other
27
funds
and
documentation
regarding
eligible
costs
shall
be
28
maintained
by
the
account
holder.
The
bill
also
requires
the
29
account
holder
to
file
reports
as
required
by
the
department
of
30
revenue.
Within
30
days
of
being
furnished
proof
of
death
of
31
the
account
holder,
the
financial
institution
where
the
account
32
is
held
shall
distribute
the
funds
to
the
estate
of
the
account
33
holder
or
to
a
transfer
on
death
or
pay
on
death
beneficiary
34
properly
designated
by
the
account
holder.
35
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8
S.F.
_____
The
bill
provides
for
two
individual
income
tax
incentives
1
relating
to
first-time
homebuyer
savings
accounts.
First,
2
an
account
holder
is
allowed
to
subtract
from
the
individual
3
income
tax
the
amount
of
contributions
made
during
the
year
4
to
the
account
holder’s
account,
not
to
exceed
$3,000
per
5
individual,
or
$6,000
for
a
married
couple
with
a
joint
account
6
and
filing
a
joint
income
tax
return.
If
the
account
holder
7
contributes
more
than
that
amount,
the
excess
may
be
subtracted
8
in
a
subsequent
tax
year
provided
the
total
exemption
in
any
9
one
tax
year
does
not
exceed
$3,000
or
$6,000,
as
applicable.
10
Second,
the
bill
exempts
any
interest
or
earnings
received
from
11
an
account
holder’s
account.
Both
the
contribution
exemption
12
and
interest
exemption
only
apply
for
the
first
10
years
after
13
the
account
holder
establishes
an
account.
14
The
bill
requires
an
account
holder
to
add
to
net
income
the
15
amount
of
withdrawal
from
an
account
that
was
made
for
purposes
16
other
than
eligible
costs
of
the
account
holder
to
the
extent
17
it
was
previously
subtracted
as
a
contribution.
Any
amount
18
remaining
in
an
account
on
the
day
after
an
account
holder
19
purchases
a
principal
residence
or
on
the
last
business
day
of
20
the
10th
calendar
year
following
the
calendar
year
the
account
21
holder
first
establishes
an
account,
whichever
occurs
first,
22
shall
be
considered
a
withdrawal
that
must
be
added
to
net
23
income
to
the
extent
it
was
previously
subtracted.
However,
24
amounts
transferred
between
different
accounts
of
the
same
25
account
holder
by
a
person
other
than
the
account
holder
or
26
amounts
withdrawn
pursuant
to
an
order
in
bankruptcy
shall
not
27
be
considered
withdrawals
that
must
be
added
to
net
income.
28
The
bill
makes
it
a
serious
misdemeanor
to
knowingly
prepare
29
or
cause
to
be
prepared
a
false
claim,
statement,
or
billing
30
to
justify
the
withdrawal
of
money
from
a
first-time
homebuyer
31
savings
account.
A
serious
misdemeanor
is
punishable
by
32
confinement
for
no
more
than
one
year
and
a
fine
of
at
least
33
$315
but
not
more
than
$1,875.
34
The
bill
requires
the
director
of
revenue
and
the
35
-7-
LSB
2200SC
(3)
86
mm/sc
7/
8
