NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A5616B
SPONSOR: Ramos (MS) TITLE OF BILL: An act to amend the private housing finance law, in
relation to establishing the New York state first home savings program,
which authorizes first time home buyers to establish savings accounts to
purchase a home; and to amend the tax law, in relation to establishing a
personal income tax deduction for deposits into such accounts
PURPOSE:
To provide future first time homebuyers a special savings account and
deduction similar to the 529 College Savings Program that may be used
for the purchase of a first home in New York State. Under this legis-
lation, an individual would be eligible to make a $5,000.00 per year tax
deductible deposit into a New York State First Home Savings account,
$10,000.00 for couples. In addition, any interest accrued would remain
untaxed. The savings account would remain under the sole custody of the
New York State Comptroller.
SUMMARY OF PROVISIONS:
Section 1 adds a new Article 28 to the Private Housing Finance Law to
create the New York State First Home Savings Program to incentivize
residents to save for the purchase of a first home in the State. A first
time home can be the purchase or construction of a house, townhouse,
condominium, or unit in a cooperative housing corporation within the
State to be used as a primary residence of the individual for not less
than two years after purchase, or construction.
The New York State Comptroller and Commissioner of the Department of
Taxation and Finance shall develop and implement the program in a manner
consistent with the provisions of this article through rules and regu-
lations. The Comptroller is responsible for entering into contracts with
financial organizations to allow for holding and investments associated
with this program. Contributions to first home savings accounts shall be
limited to $100,000 per account.
In the event of a non-qualified withdrawal, or if the home is not used
as a primary residence for a period of two years, the entire account
would be taxed, including any interest, as though it were income in the
tax years the monies were withdrawn. A 10% state penalty tax on earnings
may also apply. Penalties may be waived in the event of death, an
unforeseeable emergency, qualifying military service, or employment
location outside of the State whereby residency is required.
Statements shall be provided to account owners annually and include
contributions made, the value and distributions made during such period.
An annual fee may be imposed upon the account owner for the maintenance
of the account.
To establish that an individual is a first time home buyer, the individ-
ual shall complete a form prescribed by the Comptroller certifying under
penalties of perjury, that such individual is a first time home buyer.
A New York First Time Home Savings account may not be used for business,
a vacation home, or as an investment, except an owner occupied multiple
dwelling with no more than two rental units. Monies withdrawn from a New
York First Home Savings account and any interest which has accrued shall
not be considered as income to the individual and taxed as such if the
monies are applied for the purchase, or construction of a qualified
first home purchase.
Section 2 amends subsection (c) of section 612 of the tax law by adding
a new paragraph 44 to provide the amount that may be subtracted from
federal adjusted gross income pursuant to subsection (w) of this
section.
Section 3 amends section 612 of the tax law to add a new subsection (w)
to provide that an account owner shall be able to deduct annually from
his or her federal adjusted gross income an amount, not to exceed five
thousand dollars ($10,000 if married and filing jointly), deposited into
a New York State First Home Savings account.
Section 4 sets forth the effective date.
JUSTIFICATION:
Home ownership has long been recognized as a part of the "American
Dream." However, down payment requirements, closing costs, real estate
transfer taxes and mortgage recording taxes can often make first time
homeownership seem out of reach.
The New York State First Home Savings Program will allow persons who
have not had an ownership interest in a principal residence to establish
an account for the purchase of their first home, using a deduction
against their personal income taxes of up to five thousand dollars for
individuals and ten thousand dollars for married couples.
This legislation is a responsible way to incentivize the dream of home
ownership and help our housing market rebound. It will also stimulate
the local economy and create jobs by increasing the demand for single
family homes, townhouses, condominiums or cooperative housing units in
New York State.
Responsible homeownership is an important part of the housing continuum
and the New York State First Time Home Savings Program will help make
that a reality for future first time home buyers.
PRIOR LEGISLATIVE HISTORY:
2016: S.7903-A Passed Senate
FISCAL IMPLICATIONS:
To be determined.
EFFECTIVE DATE:
This act shall take effect on the 180th day after it shall have become a
law, and shall apply to all taxable years commencing on or after the
first of January next succeeding the date on which it shall have become
law; provided however, that subdivision 14 of section 1255 of the
private housing finance law, as added by section one of this act, shall
take effect immediately.
