senate Bill S3581

2013-2014 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 08, 2014 referred to investigations and government operations
Feb 06, 2013 referred to investigations and government operations

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S3581 - Bill Details

Current Committee:
Law Section:
Tax Law
Laws Affected:
Amd ยง612, Tax L
Versions Introduced in Previous Legislative Sessions:
2011-2012: S735
2009-2010: S1463

S3581 - Bill Texts

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Provides for the establishment of a home purchase account; enables first time house, townhouse, 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; provides 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, townhouse, condominium or unit in a cooperative housing corporation or the construction of a house, townhouse, condominium or unit in a cooperative housing corporation; provides that inappropriate application of fund monies shall cause the individual to be liable for income tax and be penalized.

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BILL NUMBER:S3581

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 corpo-
ration 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 Mew 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 stimu-
late the construction industry by increasing the long-term demand for
individual housing units, townhouses, condominiums and cooperative hous-
ing 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: 2009-2010 REFERRED TO INVESTIGATIONS AND GOVERN-
MENT OPERATIONS 2011-2012 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 $125,006)
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 addi-
tional $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
________________________________________________________________________

                                  3581

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                            February 6, 2013
                               ___________

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.
  (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.
                                                           LBD08609-01-3

S. 3581                             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 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-
SIONER, UPON FORMS PROVIDED BY THE DEPARTMENT, THAT THE MONIES WITHDRAWN
WERE USED FOR THE PURCHASE OR CONSTRUCTION OF A HOUSE, TOWNHOUSE, CONDO-

S. 3581                             3

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  DEPARTMENT  OF  FINANCIAL
SERVICES, NECESSARY TO IMPLEMENT THE PROVISIONS OF THIS  SUBSECTION  AND
TO  MAXIMIZE  THE  EFFECT  OF  THIS SUBSECTION. THE COMMISSIONER AND THE
SUPERINTENDENT OF FINANCIAL SERVICES 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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