senate Bill S735

2011-2012 Legislative Session

Authorizes an income tax deduction of monies deposited into a house, townhouse, condominium or unit in a cooperative housing corporation account

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Archive: Last Bill Status - In Committee


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor

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Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Jan 04, 2012 referred to investigations and government operations
Jan 05, 2011 referred to investigations and government operations

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S735 - Bill Details

Current Committee:
Law Section:
Tax Law
Laws Affected:
Amd ยง612, Tax L
Versions Introduced in 2009-2010 Legislative Session:
S1463

S735 - Bill Texts

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Provides for the establishment of a home purchase account; enables first time house, condominium or unit in a cooperative housing corporation purchasers to deposit monies into an account established at a banking institution and be able to take a tax deduction for the amount deposited, not exceeding $5,000 for an individual and $10,000 for a couple; withdrawal of the monies in the fund will not make an individual liable to income tax if such monies are applied toward the purchase of a house, condominium or unit in a cooperative housing corporation or the construction of a house, condominium or unit in a cooperative housing corporation; inappropriate application of fund monies shall cause the individual to be liable for income tax and be penalized.

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BILL NUMBER:S735

TITLE OF BILL:
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
withdrawals
from such an
account

PURPOSE:
To provide for future homebuyers a special savings account and
deduction similar to an individual retirement account that may be
used for the purchase of a first home.

JUSTIFICATION:
Home ownership has long been recognized as a part of the "Great
American Dream".
However, real estate values in New York State make the purchase of a
first home
extremely difficult for young people and others who have yet to buy a
first home.

The first-time homebuyers' account will allow persons who have not had
an ownership interest in a principal residence to establish an
account for the purchase of a home, using a deduction from personal
income of up to five thousands dollars for individuals and ten
thousand dollars for married couples.

The lack of affordable housing is causing an exodus of young people
who are moving from New York to states with lower housing market
values. In addition to an easing of the exodus, this legislation will
help stimulate the construction industry by increasing the long-term
demand for individual housing units, townhouses, condominiums and
cooperative housing units and thereby create jobs. This is important
because it has long been recognized that the building industry is the
engine that drives the state's economy. Unfortunately, the engine is
sputtering as evidenced by a 24% decline in single family housing
starts in New York State from 1995 to 1996 as compared to the
national average which showed an increase of 8% for the same period.

This legislation will also encourage savings by those who have not yet
purchased homes but who plan to do so.

LEGISLATIVE HISTORY:
2008 REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS
2009 REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS
2010 REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS

FISCAL IMPLICATIONS:


The Tax Department estimates that, if this bill were enacted into law,
it would result in a $3 million revenue loss during SFY 2003-2004 and
a $11 million annual loss in subsequent fiscal years. However, it is
estimated that each new home (avg. cost $125,000) sale generates
approximately $95,000 in related economic activity. Even if the
establishment of the first-time homebuyers' account increased home
sales by only 4% annually, or 6,600 new homes per year, an additional
$627 million in related economic activity would occur. Taxed at a
rate of 10%, this activity would generate $62.70 million in personal
and business tax revenues to the state. The result would be an
increase in state revenues, not to mention the creation of more jobs,
due to the homebuyers' account credit. Moreover, it is estimated that
a 4% increase in the construction of new homes in New York will
generate approximately $76.23 million in local taxes.

EFFECTIVE DATE:
This act shall take effect on the 120th day after it shall have become
a law and shall apply to all taxable years commencing on or after
January 1 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.

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

                                   735

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                               (PREFILED)

                             January 5, 2011
                               ___________

Introduced  by  Sen.  ROBACH -- read twice and ordered printed, and when
  printed to be committed to the Committee on Investigations and Govern-
  ment Operations

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 17 to read as follows:
  (17)  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
INDIVIDUAL AS A FIRST TIME HOME BUYER SHALL BE ENTITLED TO DEDUCT  ANNU-
ALLY  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 MAXI-
MUM 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.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD01999-01-1

S. 735                              2

  (II)  FOR  THE  PURPOSES  OF  THIS  SUBSECTION,  "OWNERSHIP  INTEREST"
INCLUDES THE FOLLOWING: A FEE SIMPLE INTEREST, A JOINT TENANCY, A TENAN-
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 OR SPOUSE SHALL BE CONSIDERED FIRST TIME HOME BUYERS.
  (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-

S. 735                              3

SIONER, UPON FORMS PROVIDED BY THE DEPARTMENT, THAT THE MONIES WITHDRAWN
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.

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