S T A T E   O F   N E W   Y O R K
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                                  4193

                       2009-2010 Regular Sessions

                          I N  A S S E M B L Y

                            January 30, 2009
                               ___________

Introduced  by  M.  of A. RAMOS -- Multi-Sponsored by -- M. of A. GALEF,
  HOYT, McENENY, O'DONNELL, J. RIVERA -- read once and referred  to  the
  Committee on Ways and Means

AN  ACT  to  amend the tax law, in relation to establishing a first time
  home buyer income tax deduction for monies  deposited  into  a  house,
  townhouse,  condominium  or  unit in a cooperative housing corporation
  purchase account and providing for penalties  for  unauthorized  with-
  drawals from such an account

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1.  Subsection (c) of section 612 of the tax law is amended by
adding a new paragraph 39 to read as follows:
  (39) THE AMOUNT THAT MAY BE SUBTRACTED  FROM  FEDERAL  ADJUSTED  GROSS
INCOME PURSUANT TO SUBSECTION (W) OF THIS SECTION.
  S  2. Section 612 of the tax law is amended by adding a new subsection
(w) to read as follows:
  (W) DEDUCTIONS FOR MONIES DEPOSITED INTO A HOUSE, TOWNHOUSE, CONDOMIN-
IUM OR UNIT IN A COOPERATIVE CORPORATION PURCHASE ACCOUNT.  (1) AN INDI-
VIDUAL AS A FIRST TIME HOME BUYER SHALL BE ENTITLED TO  DEDUCT  ANNUALLY
FROM HIS OR HER FEDERAL ADJUSTED GROSS INCOME THAT AMOUNT, NOT TO EXCEED
FIVE  THOUSAND  DOLLARS,  DEPOSITED  INTO A HOUSE PURCHASE ACCOUNT.   AN
INDIVIDUAL AND HIS OR HER SPOUSE SHALL JOINTLY BE ENTITLED TO A  MAXIMUM
DEDUCTION  OF  TEN  THOUSAND  DOLLARS. THIS AMOUNT MAY BE DIVIDED IN ANY
MANNER AS THE PARTIES DESIRE FOR INCOME TAX PURPOSES.
  (2) (I) FOR THE PURPOSES OF THIS SUBSECTION, A "FIRST TIME HOME BUYER"
SHALL MEAN AN INDIVIDUAL OR AN INDIVIDUAL AND HIS OR HER SPOUSE, NONE OF
WHOM HAS OR HAD AN OWNERSHIP INTEREST IN A PRINCIPAL  RESIDENCE  AT  ANY
TIME.    NO  SUCH PERSONS SHALL OWN ANY OTHER HOME INCLUDING VACATION OR
INVESTMENT RESIDENCES, EXCEPT AS OTHERWISE PROVIDED IN THIS SUBSECTION.
  (II)  FOR  THE  PURPOSES  OF  THIS  SUBSECTION,  "OWNERSHIP  INTEREST"
INCLUDES THE FOLLOWING: A FEE SIMPLE INTEREST, A JOINT TENANCY, A TENAN-

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD04821-02-9
              

A. 4193                             2

CY   IN   COMMON,   A  TENANCY  BY  THE  ENTIRETY,  THE  INTEREST  OF  A
TENANT-SHARE-HOLDER IN A COOPERATIVE, A LIFE ESTATE AND A LAND CONTRACT.
INTERESTS WHICH  DO  NOT  CONSTITUTE  OWNERSHIP  INTERESTS  INCLUDE  THE
FOLLOWING:  (A)  REMAINDER  INTERESTS,  (B)  A  LEASE WITH OR WITHOUT AN
OPTION TO PURCHASE, (C) A MERE EXPECTANCY TO INHERIT AN  INTEREST  IN  A
RESIDENCE,  (D) THE INTEREST THAT A PURCHASER OF A RESIDENCE ACQUIRES ON
THE EXECUTION OF A PURCHASE CONTRACT AND (E) AN INTEREST IN REAL  ESTATE
OTHER THAN A RESIDENCE.
  (III)  TO ESTABLISH THAT AN INDIVIDUAL IS A FIRST TIME HOME BUYER, THE
INDIVIDUAL SHALL COMPLETE A FORM PROMULGATED BY THE DEPARTMENT  CERTIFY-
ING,  UNDER  THE  PENALTIES  OF PERJURY, THAT SUCH INDIVIDUAL IS A FIRST
TIME HOME BUYER.
  (IV) IN THE CASE OF AN INDIVIDUAL AND HIS OR HER SPOUSE, IF EITHER THE
INDIVIDUAL OR HIS OR HER SPOUSE IS NOT A FIRST TIME HOME BUYER,  NEITHER
THE  INDIVIDUAL  NOR  THE  SPOUSE  SHALL BE CONSIDERED A FIRST TIME HOME
BUYER.
  (V) IF AN INDIVIDUAL'S ONLY POTENTIALLY DISQUALIFYING  PRESENT  OWNER-
SHIP  INTEREST  IS  OWNERSHIP  OF  A MOBILE HOME THAT IS NOT PERMANENTLY
ATTACHED TO THE LAND, THE INDIVIDUAL MAY BE CONSIDERED A FIRST TIME HOME
BUYER AND MAY BE ELIGIBLE FOR A HOUSE PURCHASE  ACCOUNT  DEDUCTION.  FOR
THE PURPOSES OF THIS SUBPARAGRAPH A "MOBILE HOME" SHALL MEAN A STRUCTURE
WHICH  IS PERMANENTLY ATTACHED, BEING PERMANENTLY ANCHORED TO REAL PROP-
ERTY AND HAS HAD WHEELS AND  OTHER  COMPONENTS  USED  IN  TRANSPORTATION
REMOVED.  IF, DUE TO HIS OR HER OWNERSHIP OF A MOBILE HOME, THE INDIVID-
UAL HAS CLAIMED A REAL ESTATE TAX OR HOME MORTGAGE DEDUCTION ON  HIS  OR
HER  INCOME TAX RETURNS, SUCH INDIVIDUAL SHALL NOT BE CONSIDERED A FIRST
TIME HOME BUYER REGARDLESS OF WHETHER THE MOBILE  HOME  WAS  PERMANENTLY
ATTACHED TO THE LAND.
  (VI)  AN  INDIVIDUAL  MUST  NOT  INTEND TO USE ANY PORTION OF THE REAL
PROPERTY PURCHASED USING THE HOUSE PURCHASE ACCOUNT FUNDS IN A TRADE  OR
BUSINESS,  OR AS A VACATION HOME OR AS AN INVESTMENT, EXCEPT AS AN OWNER
OCCUPIED MULTIPLE DWELLING WITH NO MORE THAN TWO RENTAL UNITS.
  (3) FOR PURPOSES OF THIS SUBSECTION A "HOUSE PURCHASE  ACCOUNT"  SHALL
MEAN  AN  ACCOUNT  ORGANIZED  OR CREATED IN THIS STATE FOR THE EXCLUSIVE
BENEFIT OF AN INDIVIDUAL AND HIS OR HER SPOUSE WHO IS A FIRST TIME HOME,
TOWNHOUSE, CONDOMINIUM OR UNIT  IN  A  COOPERATIVE  HOUSING  CORPORATION
PURCHASER  OR  INDIVIDUAL  WHO  HAS  CONTRACTED  WITH  A BUILDER FOR THE
CONSTRUCTION OF A PRINCIPAL RESIDENCE. EVERY SUCH ACCOUNT  SHALL  COMPLY
WITH THE FOLLOWING REQUIREMENTS:
  (I) THE ACCOUNT SHALL BE HELD IN A BANKING ORGANIZATION, AS DEFINED IN
SECTION  TWO  OF  THE  BANKING  LAW, NATIONAL BANKING ASSOCIATION, STATE
CHARTERED CREDIT UNION, FEDERAL MUTUAL SAVINGS BANK, FEDERAL SAVINGS AND
LOAN ASSOCIATION, OR FEDERAL CREDIT UNION AND SUCH  ACCOUNT  WAS  ESTAB-
LISHED PURSUANT TO THIS SUBSECTION.
  (II) ANY AMOUNT IN THE ACCOUNT IS NONFORFEITABLE.
  (III) THE FUNDS IN SUCH ACCOUNT SHALL NOT BE COMMINGLED WITH ANY OTHER
MONIES OF THE INDIVIDUAL BY THE TRUSTEE.
  (IV) MONIES WITHDRAWN FROM SUCH ACCOUNT AND INTEREST WHICH HAS ACCRUED
SHALL  NOT  BE  CONSIDERED  AS INCOME TO THE INDIVIDUAL AND TAXED IF THE
MONIES ARE APPLIED FOR THE PURCHASE OR CONSTRUCTION OF  A  HOUSE,  TOWN-
HOUSE,  CONDOMINIUM  OR  UNIT IN A COOPERATIVE HOUSING CORPORATION TO BE
USED AS A PRIMARY RESIDENCE OF THE INDIVIDUAL FOR A PERIOD OF  NOT  LESS
THAN TWO YEARS AFTER PURCHASE OR CONSTRUCTION.
  (4) WITHIN SIXTY DAYS AFTER WITHDRAWAL OF MONEYS FROM A HOUSE PURCHASE
ACCOUNT,  AN  INDIVIDUAL  SHALL SUBMIT SATISFACTORY PROOF TO THE COMMIS-
SIONER, UPON FORMS PROVIDED BY THE DEPARTMENT, THAT THE MONIES WITHDRAWN

A. 4193                             3

WERE USED FOR THE PURCHASE OR CONSTRUCTION OF A HOUSE, TOWNHOUSE, CONDO-
MINIUM OR UNIT IN A COOPERATIVE HOUSING CORPORATION. IN THE  EVENT  THAT
AN  INDIVIDUAL  WITHDRAWS ALL OR ANY PART OF THE MONIES FROM THE ACCOUNT
AND  DOES NOT EITHER APPLY THE MONIES TO THE PURCHASE OR CONSTRUCTION OF
A HOUSE, TOWNHOUSE, CONDOMINIUM OR UNIT IN A COOPERATIVE HOUSING  CORPO-
RATION,  OR  FAILS  TO  SUBMIT TO THE COMMISSIONER THE PROOF AS REQUIRED
PURSUANT TO THIS  PARAGRAPH,  SUCH  INDIVIDUAL  SHALL  HAVE  THE  ENTIRE
ACCOUNT  TAXED,  INCLUDING  INTEREST WHICH HAS ACCRUED, AS THOUGH IT WAS
INCOME IN THE YEARS THAT THE MONIES FROM THE ACCOUNT WERE WITHDRAWN.  IN
THE EVENT THAT AN INDIVIDUAL DOES NOT USE THE HOUSE,  TOWNHOUSE,  CONDO-
MINIUM  OR  UNIT IN A COOPERATIVE HOUSING CORPORATION AS A PRIMARY RESI-
DENCE FOR A PERIOD OF NOT LESS THAN TWO  YEARS  AFTER  THE  PURCHASE  OR
CONSTRUCTION  SUCH  INDIVIDUAL  SHALL  HAVE  THE  ENTIRE  HOUSE PURCHASE
ACCOUNT TAXED, INCLUDING INTEREST WHICH HAS ACCRUED, AS  THOUGH  IT  WAS
INCOME IN THE YEAR THAT THE MONIES FROM THE ACCOUNT WERE WITHDRAWN.  FOR
THE  PURPOSES  OF THIS PARAGRAPH, THE TWO YEAR PERIOD SHALL BEGIN TO RUN
AT THE TIME TITLE TO THE HOUSE, TOWNHOUSE, CONDOMINIUM,  OR  UNIT  IN  A
COOPERATIVE HOUSING CORPORATION PASSES TO THE INDIVIDUAL.
  (5)  THE  COMMISSIONER  SHALL  ESTABLISH  A PENALTY OF TEN PERCENT FOR
THOSE HOUSE PURCHASE ACCOUNTS WHICH ARE TAXED IN ACCORDANCE  WITH  PARA-
GRAPH  FOUR OF THIS SUBSECTION.  THE PENALTY SHALL BE IN ADDITION TO THE
TAX DUE FOR THOSE FUNDS INAPPROPRIATELY APPLIED. SUCH PENALTY  SHALL  BE
WAIVED  BY  THE  COMMISSIONER  IF THE INDIVIDUAL CAN SHOW PROOF THAT THE
REASON THE INDIVIDUAL DID NOT USE THE HOUSE, TOWNHOUSE,  CONDOMINIUM  OR
UNIT  IN  A COOPERATIVE HOUSING CORPORATION AS A PRIMARY RESIDENCE FOR A
PERIOD OF TWO YEARS OR MORE AFTER THE PURCHASE OR CONSTRUCTION, WAS  DUE
TO EITHER:
  (I)  AN  EMPLOYMENT  RELOCATION  OUTSIDE THE STATE AND SUCH RELOCATION
REQUIRED THE INDIVIDUAL TO BECOME A RESIDENT OF ANOTHER STATE; OR
  (II) AN UNFORESEEABLE FINANCIAL EMERGENCY.
  FOR PURPOSES OF THIS PARAGRAPH, AN "UNFORESEEABLE FINANCIAL EMERGENCY"
SHALL MEAN A SEVERE FINANCIAL HARDSHIP TO THE INDIVIDUAL RESULTING  FROM
A  SUDDEN  AND  UNEXPECTED ILLNESS OR ACCIDENT OF THE INDIVIDUAL OR OF A
DEPENDENT.  THE CIRCUMSTANCES THAT CONSTITUTE AN UNFORESEEABLE EMERGENCY
WILL DEPEND UPON THE FACTS OF EACH CASE, HOWEVER,  WITHDRAWAL  OF  HOUSE
PURCHASE  ACCOUNT  FUNDS MAY NOT BE MADE, WITHOUT PENALTY, TO THE EXTENT
THAT SUCH HARDSHIP IS OR MAY BE RELIEVED BY EITHER:
  (A) REIMBURSEMENT OR COMPENSATION BY INSURANCE OR OTHERWISE; OR
  (B) LIQUIDATION OF THE INDIVIDUAL'S ASSETS, TO THE EXTENT  THE  LIQUI-
DATION OF SUCH ASSETS WOULD NOT ITSELF CAUSE SEVERE FINANCIAL HARDSHIP.
  (6)  THE  COMMISSIONER  IS HEREBY DIRECTED TO PROMULGATE ALL RULES AND
REGULATIONS, AFTER CONSULTATION WITH THE BANKING  DEPARTMENT,  NECESSARY
TO  IMPLEMENT  THE  PROVISIONS  OF  THIS  SUBSECTION AND TO MAXIMIZE THE
EFFECT OF THIS SUBSECTION. THE COMMISSIONER AND THE  BANKING  BOARD  ARE
HEREBY  DIRECTED  TO  COOPERATE  WITH  EACH  OTHER IN THE ESTABLISHMENT,
SUPERVISION AND REGULATION OF THE  INDIVIDUAL  HOUSE  PURCHASE  ACCOUNTS
AUTHORIZED TO BE CREATED IN THIS SUBSECTION.
  S 3. This act shall take effect on the one hundred twentieth day after
it  shall  have become a law and shall apply to taxable years commencing
on or after January first of the year next succeeding the year in  which
it  shall  have  become  a  law;  provided  however, that paragraph 6 of
subsection (w) of section 612 of the tax law, as added by section two of
this act, shall take effect immediately.