First-Time Homeowners Assistance Act of 2019
This bill establishes a tax-exempt qualified first-time homeowner assistance program. Under such a program, a person may make cash contributions to a first-time homeowner assistance account.
The bill defines "first-time homeowner assistance account" as an account for providing down payment assistance to an account beneficiary who is a first-time homeowner of a principal residence in the United States. The amount of such downpayment assistance cannot exceed 10% of the cost of acquiring, constructing, or substantially improving the residence.
[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4120 Introduced in House (IH)]
<DOC>
116th CONGRESS
1st Session
H. R. 4120
To amend the Internal Revenue Code of 1986 to provide for the tax
treatment of first-time homeowner assistance programs established by
States.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
July 30, 2019
Mr. Lawson of Florida (for himself and Ms. Tlaib) introduced the
following bill; which was referred to the Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to provide for the tax
treatment of first-time homeowner assistance programs established by
States.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``First-Time Homeowners Assistance Act
of 2019''.
SEC. 2. QUALIFIED FIRST-TIME HOMEOWNER ASSISTANCE PROGRAM.
(a) In General.--Part VIII of subchapter F of chapter 1 of the
Internal Revenue Code of 1986 is amended by adding at the end the
following new section:
``SEC. 530A. QUALIFIED FIRST-TIME HOMEOWNER ASSISTANCE PROGRAM.
``(a) General Rule.--A qualified first-time homeowner assistance
program shall be exempt from taxation under this subtitle.
Notwithstanding the preceding sentence, such program shall be subject
to the taxes imposed by section 511 (relating to imposition of tax on
unrelated business income of charitable organizations).
``(b) Qualified First-Time Homeowner Assistance Program.--For
purposes of this section--
``(1) In general.--The term `qualified first-time homeowner
assistance program' means a program established and maintained
by a State, or agency or instrumentality thereof--
``(A) under which a person may make contributions
to a first-time homeowner assistance account,
``(B) under which neither contributors nor
beneficiaries are prohibited by reason of residency
within the State, and
``(C) which meets the other requirements of this
subsection.
``(2) Cash contributions.--A program shall not be treated
as a qualified first-time homeowner assistance program unless
it provides that contributions--
``(A) may only be made in cash,
``(B) may not be made after the date on which the
account beneficiary attains age 40, or
``(C) except in the case of rollover contributions,
if such contribution would result in aggregate
contributions for all taxable years exceeding $20,000.
``(3) Separate accounting.--A program shall not be treated
as a qualified first-time homeowner assistance program unless
it provides separate accounting for each designated
beneficiary.
``(4) Limited investment direction.--A program shall not be
treated as a qualified first-time homeowner assistance program
unless it provides that any contributor to, or designated
beneficiary under, such program may, directly or indirectly,
direct the investment of any contributions to the program (or
any earnings thereon) no more than 2 times in any calendar
year.
``(5) No pledging of interest as security.--A program shall
not be treated as a qualified first-time homeowner assistance
program if it allows any interest in the program or any portion
thereof to be used as security for a loan.
``(6) Certain restrictions disallowed.--A program shall not
be treated as a qualified first-time homeowner assistance
program unless, with respect to each first-time homeowner
assistance account, the program does not--
``(A) prohibit the designated beneficiary from
acquiring or constructing a principal residence outside
of the State,
``(B) limit any State tax preferences for
contributions to these accounts based on the residence
of the contributor or the designated beneficiary, or
``(C) condition withdrawals, or limit any State tax
preferences for withdrawals, from these accounts from
being applied only with respect to residences located
within the State.
``(c) First-Time Homeowner Assistance Account.--For purposes of
this section--
``(1) In general.--The term `first-time homeowner
assistance account' means an account established under a
qualified first-time homeowner assistance program for the
purpose of providing qualified down payment assistance to the
designated beneficiary of the account.
``(2) Qualified down payment assistance.--
``(A) In general.--The term `qualified down payment
assistance' means a distribution--
``(i) to a designated beneficiary who is a
first-time homeowner of a principal residence
in the United States,
``(ii) under a qualified first-time
homeowner assistance program in connection with
the acquisition, construction, or substantial
improvement of a principal residence at or
before the time of such acquisition or
construction, and
``(iii) the amount of which, when added to
all prior qualified down payment assistance
under this subparagraph during any taxable
year, does not exceed 10 percent of the cost of
acquiring, constructing, or substantially
improving the principal residence of the
designated beneficiary.
``(B) First-time homeowner.--The term `first-time
homeowner' means any individual if such individual (and
if married, such individual's spouse) had no present
ownership interest in a principal residence during the
3-year period ending on the date of the acquisition,
construction, or substantial improvement of the
principal residence.
``(C) Principal residence.--The term `principal
residence' has the same meaning as when used in section
121.
``(D) Exception.--A residence may be taken into
account for purposes of this paragraph only if--
``(i) the residence is not acquired from a
person related to the person acquiring such
residence (or, if married, such individual's
spouse), and
``(ii) the basis of the residence in the
hands of the person acquiring such residence is
not determined--
``(I) in whole or in part by
reference to the adjusted basis of such
residence in the hands of the person
from whom acquired, or
``(II) under section 1014(a)
(relating to property acquired from a
decedent).
``(E) Construction.--A residence which is
constructed by the taxpayer shall be treated as
purchased by the taxpayer on the date the taxpayer
first occupies such residence.
``(F) Special rules relating to marriage.--
``(i) Married couples must file joint
return.--If the designated beneficiary is
married on the date of the distribution, the
distribution shall not be treated as qualified
down payment assistance unless the taxpayer and
the taxpayer's spouse file a joint return for
the taxable year.
``(ii) Marital status.--An individual
legally separated from his spouse under a
decree of divorce or of separate maintenance
shall not be considered as married.
``(3) Designated beneficiary.--The term `designated
beneficiary' with respect to a first-time homeowner assistance
account means--
``(A) the individual designated at the
establishment of the account as the beneficiary of
amounts paid (or to be paid) to the account, and
``(B) in the case of a change in beneficiaries
described in subsection (d)(3)(C), the individual who
is the new beneficiary of the account.
``(4) Member of family.--The term `member of the family'
means, with respect to any designated beneficiary--
``(A) the spouse of such beneficiary,
``(B) an individual who bears a relationship to
such beneficiary which is described in subparagraphs
(A) through (G) of section 152(d)(2),
``(C) the spouse of any individual described in
subparagraph (B), and
``(D) any first cousin of such beneficiary.
``(d) Tax Treatment of Designated Beneficiaries and Contributors.--
``(1) In general.--Except as otherwise provided in this
subsection, no amount shall be includible in gross income of--
``(A) a designated beneficiary under a qualified
first-time homeowner assistance program, or
``(B) a contributor to such program on behalf of a
designated beneficiary, with respect to any
distribution or earnings under such program.
``(2) Gift tax treatment of contributions.--For purposes of
chapters 12 and 13--
``(A) In general.--Any contribution to a qualified
first-time homeowner assistance program on behalf of
any designated beneficiary--
``(i) shall be treated as a completed gift
to such beneficiary which is not a future
interest in property, and
``(ii) shall not be treated as a qualified
transfer under section 2503(e).
``(B) Treatment of excess contributions for gift
tax purposes.--If the aggregate amount of contributions
described in subparagraph (A) during the calendar year
by a donor exceeds the limitation for such year under
section 2503(b), such aggregate amount shall, at the
election of the donor, be taken into account for
purposes of such section ratably over the 5-year period
beginning with such calendar year.
``(3) Distributions.--
``(A) In general.--Any distribution under a
qualified first-time homeowner assistance program shall
be includible in the gross income of the distributee in
the manner as provided under section 72 to the extent
not excluded from gross income under this paragraph.
``(B) Distributions for qualified down payment
assistance.--For purposes of this paragraph, if--
``(i) distributions under a qualified
first-time homeowner assistance program do not
exceed the qualified down payment assistance,
no amount shall be includible in gross income,
and
``(ii) in any other case, the amount
otherwise includible in gross income shall be
reduced by an amount which bears the same ratio
to such amount as such assistance bear to such
distributions.
``(C) Change in beneficiaries or programs.--
``(i) Rollovers.--Subparagraph (A) shall
not apply to that portion of any distribution
which, within 60 days of such distribution, is
transferred--
``(I) to another qualified
distribution under a qualified first-
time homeowner assistance program or
the benefit of the designated
beneficiary, or
``(II) to the credit of another
designated beneficiary under a
qualified distribution under a
qualified first-time homeowner
assistance program who is a member of
the family of the designated
beneficiary with respect to which the
distribution was made.
``(ii) Change in designated
beneficiaries.--Any change in the designated
beneficiary of an interest in a qualified
distribution under a qualified first-time
homeowner assistance program shall not be
treated as a distribution for purposes of
subparagraph (A) if the new beneficiary is a
member of the family of the old beneficiary.
``(iii) Limitation on certain rollovers.--
Clause (i)(I) shall not apply to any transfer
if such transfer occurs within 12 months from
the date of a previous transfer to any
qualified distribution under a qualified first-
time homeowner assistance program for the
benefit of the designated beneficiary.
``(4) Estate tax treatment.--
``(A) In general.--No amount shall be includible in
the gross estate of any individual for purposes of
chapter 11 by reason of an interest in a qualified
distribution under a qualified first-time homeowner
assistance program.
``(B) Amounts includible in estate of designated
beneficiary in certain cases.--Subparagraph (A) shall
not apply to amounts distributed on account of the
death of a beneficiary.
``(C) Amounts includible in estate of donor making
excess contributions.--In the case of a donor who makes
the election described in paragraph (2)(B) and who dies
before the close of the 5-year period referred to in
such paragraph, notwithstanding subparagraph (A), the
gross estate of the donor shall include the portion of
such contributions properly allocable to periods after
the date of death of the donor.
``(5) Other gift tax rules.--For purposes of chapters 12
and 13--
``(A) Treatment of distributions.--Except as
provided in subparagraph (B), in no event shall a
distribution from a qualified distribution under a
qualified first-time homeowner assistance program be
treated as a taxable gift.
``(B) Treatment of designation of new
beneficiary.--The taxes imposed by chapters 12 and 13
shall apply to a transfer by reason of a change in the
designated beneficiary under the program (or a rollover
to the account of a new beneficiary) unless the new
beneficiary is--
``(i) assigned to the same generation as
(or a higher generation than) the old
beneficiary (determined in accordance with
section 2651), and
``(ii) a member of the family of the old
beneficiary.
``(6) Additional tax for distributions not used for
qualified downpayment assistance.--
``(A) In general.--The tax imposed by this chapter
for any taxable year on any taxpayer who receives a
payment or distribution from a qualified first-time
homeowner assistance program which is includible in
gross income shall be increased by 10 percent of the
amount which is so includible.
``(B) Exceptions.--Subparagraph (A) shall not apply
if the payment or distribution is--
``(i) made to a beneficiary (or to the
estate of the designated beneficiary) on or
after the death of the designated beneficiary,
``(ii) attributable to the designated
beneficiary's being disabled (within the
meaning of section 72(m)(7)), or
``(iii) an amount which is includible in
gross income solely by application of paragraph
(2)(C)(i)(II) for the taxable year.
``(C) Contributions returned before certain date.--
Subparagraph (A) shall not apply to the distribution of
any contribution made during a taxable year on behalf
of the designated beneficiary if--
``(i) such distribution is made before the
first day of the sixth month of the taxable
year following the taxable year, and
``(ii) such distribution is accompanied by
the amount of net income attributable to such
excess contribution.
Any net income described in clause (ii) shall be
included in gross income for the taxable year in which
such excess contribution was made.
``(e) Reports.--Each officer or employee having control of the
qualified distribution under a qualified first-time homeowner
assistance program or their designee shall make such reports regarding
such program to the Secretary and to designated beneficiaries with
respect to contributions, distributions, and such other matters as the
Secretary may require. The reports required by this subsection shall be
filed at such time and in such manner and furnished to such individuals
at such time and in such manner as may be required by the Secretary.
``(f) Regulations.--Notwithstanding any other provision of this
section, the Secretary shall prescribe such regulations as may be
necessary or appropriate to carry out the purposes of this section and
to prevent abuse of such purposes, including regulations under chapters
11, 12, and 13 of this title.''.
(b) Conforming Amendments.--
(1) Tax on excess contributions.--
(A) In general.--Subsection (a) of section 4973 of
such Code is amended by striking ``or'' at the end of
paragraph (5), by inserting ``or'' at the end of
paragraph (6), and by inserting after paragraph (6) the
following new paragraph:
``(7) a first-time homeowner assistance account (as defined
in section 530A),''.
(B) Excess contribution.--Section 4973 of such Code
is amended by adding at the end the following new
subsection:
``(i) Excess Contributions to First-Time Homeowner Assistance
Account.--For purposes of this section--
``(1) In general.--In the case of a first-time homeowner
assistance account (as defined in section 530A) (within the
meaning of section 529A), the term `excess contributions' means
the amount by which the amount contributed for the taxable year
to such account (other than contributions under section
530A(d)(3)(C)) exceeds the contribution limit under section
530A(b)(2)(C).
``(2) Special rule.--For purposes of this subsection, any
contribution which is distributed out of the first-time
homeowner assistance account (as so defined) in a distribution
to which the last sentence of section 530A(d)(6)(C) applies
shall be treated as an amount not contributed.''.
(2) Section 26(b)(2) is amended by striking ``and'' at the
end of subparagraph (X), by striking the period at the end of
subparagraph (Y) and inserting ``, and'', and by inserting
after subparagraph (Y) the following:
``(Z) section 530A(d)(3)(A) (relating to additional
tax on first-time homeowner assistance account
distributions not used for qualified homeowner
assistance).''.
(3) Penalty for failure to file reports.--Section
6693(a)(2) of such Code is amended by striking ``and'' at the
end of subparagraph (E), by striking the period at the end of
subparagraph (F) and inserting ``, and'', and by inserting
after subparagraph (F) the following:
``(G) section 530A(e) (relating to qualified first-
time homeowner assistance program), and''.
(4) Section 877A of such Code is amended--
(A) in subsection (e)(2) by inserting ``a qualified
first-time homeowner assistance program (as defined in
section 530A),'' after ``530),'', and
(B) in subsection (g)(6) by inserting
``530A(c)(3),'' after ``529(c)(3),''.
(5) Section 4965(c) of such Code is amended by striking
``or'' at the end of paragraph (7), by striking the period at
the end of paragraph (8) and inserting ``, or'', and by
inserting after paragraph (8) the following new paragraph:
``(9) a program described in section 530A.''.
(c) Clerical Amendment.--The table of sections for part VIII of
subchapter F of chapter 1 of such Code is amended by adding at the end
the following new item:
``Sec. 530A. Qualified first-time homeowner assistance program.''.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this Act.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
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