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S04058 Summary:

BILL NOS04058B
 
SAME ASSAME AS A05616-B
 
SPONSORLITTLE
 
COSPNSRADDABBO, AKSHAR, AVELLA, BONACIC, BOYLE, BROOKS, CARLUCCI, COMRIE, CROCI, DEFRANCISCO, DILAN, FUNKE, GALLIVAN, GIANARIS, GRIFFO, HAMILTON, HANNON, HELMING, KAMINSKY, KENNEDY, MURPHY, O'MARA, ORTT, PARKER, PHILLIPS, RANZENHOFER, RITCHIE, ROBACH, SANDERS, SAVINO, SEWARD, VALESKY, YOUNG
 
MLTSPNSR
 
Add Art 28 §§1250 - 1256, Priv Hous Fin L; amd §612, Tax L
 
Establishes the New York state first home savings program to authorize first time home buyers to establish savings accounts to buy their first home.
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S04058 Actions:

BILL NOS04058B
 
02/02/2017REFERRED TO HOUSING, CONSTRUCTION AND COMMUNITY DEVELOPMENT
03/15/2017REPORTED AND COMMITTED TO FINANCE
06/08/2017AMEND AND RECOMMIT TO FINANCE
06/08/2017PRINT NUMBER 4058A
06/14/2017AMEND AND RECOMMIT TO FINANCE
06/14/2017PRINT NUMBER 4058B
06/19/2017COMMITTEE DISCHARGED AND COMMITTED TO RULES
06/19/2017ORDERED TO THIRD READING CAL.1950
06/19/2017SUBSTITUTED BY A5616B
 A05616 AMEND=B Ramos (MS)
 02/10/2017referred to ways and means
 05/23/2017reported
 05/25/2017advanced to third reading cal.525
 06/05/2017passed assembly
 06/05/2017delivered to senate
 06/05/2017REFERRED TO RULES
 06/07/2017recalled from senate
 06/07/2017RETURNED TO ASSEMBLY
 06/07/2017vote reconsidered - restored to third reading
 06/07/2017amended on third reading 5616a
 06/14/2017amended on third reading 5616b
 06/19/2017repassed assembly
 06/19/2017returned to senate
 06/19/2017RECOMMITTED TO RULES
 06/19/2017SUBSTITUTED FOR S4058B
 06/19/20173RD READING CAL.1950
 06/19/2017PASSED SENATE
 06/19/2017RETURNED TO ASSEMBLY
 12/06/2017delivered to governor
 12/18/2017signed chap.472
 12/18/2017approval memo.43
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S04058 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                         4058--B
 
                               2017-2018 Regular Sessions
 
                    IN SENATE
 
                                    February 2, 2017
                                       ___________
 
        Introduced  by  Sens.  LITTLE, ADDABBO, AKSHAR, AVELLA, BONACIC, BROOKS,
          COMRIE, CROCI, DeFRANCISCO, DILAN, FUNKE, GALLIVAN, GIANARIS,  GRIFFO,
          HAMILTON, HANNON, HELMING, KAMINSKY, KENNEDY, LATIMER, MURPHY, O'MARA,
          ORTT, PARKER, PHILLIPS, RANZENHOFER, RITCHIE, ROBACH, SANDERS, SAVINO,
          SEWARD,  VALESKY,  YOUNG  --  read twice and ordered printed, and when
          printed to be committed to the Committee on Housing, Construction  and
          Community  Development  --  reported favorably from said committee and
          committed to the Committee on Finance --  committee  discharged,  bill
          amended,  ordered reprinted as amended and recommitted to said commit-
          tee --  committee  discharged,  bill  amended,  ordered  reprinted  as
          amended and recommitted to said committee
 
        AN  ACT  to amend the private housing finance law, in relation to estab-
          lishing the New York state first home savings program,  which  author-
          izes  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
 
          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:
 
     1    Section 1. The private housing finance law is amended by adding a  new
     2  article 28 to read as follows:
     3                               ARTICLE XXVIII
     4                          NEW YORK STATE FIRST HOME
     5                               SAVINGS PROGRAM
     6  Section 1250. Program established.
     7          1251. Purposes.
     8          1252. Definitions.
     9          1253. Functions of the comptroller.
    10          1254. Powers of the comptroller.
    11          1255. Program requirements; first home savings account.
    12          1256. Program limitations; first home savings account.
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD00765-11-7

        S. 4058--B                          2
 
     1    §  1250. Program established. There is hereby established a first home
     2  savings program and such program shall be known and may be cited as  the
     3  "New York state first home savings program".
     4    §  1251.  Purposes.  The purposes of the program shall be to authorize
     5  the establishment of first home savings accounts and to  provide  guide-
     6  lines for the maintenance of such accounts to:
     7    1.  enable  residents  of this state to benefit from the tax incentive
     8  provided for qualified state first home savings accounts  under  section
     9  six hundred twelve of the tax law; and
    10    2.  incentivize  residents  to  save  for the purchase of a first home
    11  within the state.
    12    § 1252. Definitions. As used in  this  article,  the  following  terms
    13  shall have the following meanings:
    14    1.  "Account" or "first home savings account" shall mean an individual
    15  savings account established in accordance with the  provisions  of  this
    16  article  for  the  exclusive  benefit of the account owner or designated
    17  beneficiary that is the first time buyer of a home, townhome,  condomin-
    18  ium or unit in a cooperative housing corporation.
    19    2.  "Account owner" shall mean a taxpayer who enters into a first home
    20  savings agreement pursuant to the provisions of this article,  including
    21  a  person  who  enters into such an agreement as a fiduciary or agent on
    22  behalf of a trust, estate, partnership, association, company  or  corpo-
    23  ration.
    24    3.  "Designated beneficiary" shall mean, with respect to an account or
    25  accounts, the designated individual or individuals    whose  first  home
    26  purchase expenses are expected to be paid from the account or accounts.
    27    4.  "Financial  organization" shall mean an organization authorized to
    28  do business in the state, and (a) which is an  authorized  fiduciary  to
    29  act  as a trustee pursuant to the provisions of an act of congress enti-
    30  tled  "Employee  Retirement  Income  Security  Act  of  1974",  as  such
    31  provisions  may  be  amended from time to time, or an insurance company;
    32  and (b)(i) is licensed or  chartered  by  the  department  of  financial
    33  services,  (ii)  is  chartered  by  an agency of the federal government,
    34  (iii) is subject to the jurisdiction and regulation  of  the  securities
    35  and  exchange  commission  of  the federal government, (iv) is any other
    36  entity otherwise authorized to act in this state as a  trustee  pursuant
    37  to  the  provisions  of an act of congress entitled "Employee Retirement
    38  Income Security Act of 1974", as such provisions  may  be  amended  from
    39  time  to time, (v) or any banking organization as defined in subdivision
    40  eleven of section two of the banking law, national banking  association,
    41  state  chartered  credit  union,  federal  mutual  savings bank, federal
    42  savings and loan association or federal credit union.
    43    5. "First time home buyer" shall mean an  individual  or  individuals,
    44  neither  of  whom  has or had an ownership interest in a principal resi-
    45  dence at any time, including residences owned in the  United  States  or
    46  abroad.    No such person shall own any other home including vacation or
    47  investment residences, including residences owned in the  United  States
    48  or  abroad,  except as otherwise provided in this subdivision. If either
    49  the individual or individuals are not first time  home  buyers,  neither
    50  the  individual  or  individuals  shall  be considered a first time home
    51  buyer. If an individual's only potentially disqualifying present  owner-
    52  ship  interest  is ownership of a mobile or manufactured home, the indi-
    53  vidual shall be considered a first time home buyer and shall be eligible
    54  for a first home account deduction. For the purposes of this  article  a
    55  "mobile  or  manufactured home" shall mean a structure that is valued as
    56  personal property and not real property. If, due to his or her ownership

        S. 4058--B                          3
 
     1  of a mobile or manufactured home, the  individual  has  claimed  a  real
     2  estate  tax or home mortgage deduction on his or her personal income tax
     3  returns, such individual shall not be considered a first time home buyer
     4  regardless  of  whether  the  mobile of manufactured home was considered
     5  personal or real property.
     6    6. "Ownership interest" shall mean a  fee  simple  interest,  a  joint
     7  tenancy, a tenancy in common, a tenancy by the entirety, the interest of
     8  a  tenant-share  holder  in  a  cooperative,  a  life  estate  or a land
     9  contract. Interests which do not constitute ownership interests  include
    10  the  following:  (a) remainder interests, (b) a lease with or without an
    11  option to purchase, (c) a mere expectancy to inherit an  interest  in  a
    12  residence,  (d) the interest that a purchaser of a residence acquires on
    13  the execution of a purchase contract and (e) an interest in real  estate
    14  other than a residence.
    15    7. "Program" shall mean the New York first home savings program estab-
    16  lished pursuant to this article.
    17    8.  "Qualified first home purchase expenses" shall mean monies applied
    18  for the purchase or construction of a house, townhouse,  condominium  or
    19  unit in a cooperative housing corporation within the state to be used as
    20  a primary residence of the account owner or designated beneficiary for a
    21  period of not less than two years after purchase.
    22    9.  "Qualified  residential  housing"  shall  mean a house, townhouse,
    23  condominium or unit in a  cooperative  housing  corporation  within  the
    24  state.
    25    10.  "Qualified withdrawal" shall mean a withdrawal from an account to
    26  pay the qualified first home purchase expense of the  account  owner  or
    27  designated beneficiary of the account.
    28    11.  "Nonqualified withdrawal" shall mean a withdrawal from an account
    29  but shall not include:
    30    (a) a qualified withdrawal;
    31    (b) a withdrawal made as the result of death;
    32    (c) an unforeseeable emergency; or
    33    (d) need based upon qualifying for military service in the armed forc-
    34  es of the United States as determined by rules an regulations promulgat-
    35  ed by the comptroller.
    36    12. "Comptroller" shall mean the state comptroller.
    37    13. "Management contract" shall mean  the  contract  executed  by  the
    38  comptroller and a financial organization selected to act as a depository
    39  and manager of the program.
    40    14. "First home savings agreement" shall mean an agreement between the
    41  comptroller or a financial organization and the account owner.
    42    15.  "Program manager" shall mean a financial organization selected by
    43  the comptroller to act as a depository and manager of the program.
    44    16.  "Commissioner"  shall  mean  the  commissioner  of  taxation  and
    45  finance.
    46    § 1253. Functions of the comptroller.  1. The comptroller shall imple-
    47  ment  the  program  under  the  terms and conditions established by this
    48  article and a memorandum of understanding with the commissioner relating
    49  to any terms or conditions not otherwise expressly provided for in  this
    50  article.
    51    2. In furtherance of such implementation the comptroller shall:
    52    (a)  develop and implement the program in a manner consistent with the
    53  provisions of this article through rules and regulations established  in
    54  accordance with the state administrative procedure act;
    55    (b) engage the services of consultants on a contract basis for render-
    56  ing professional and technical assistance and advice;

        S. 4058--B                          4
 
     1    (c)  seek rulings and other guidance from the United States Department
     2  of Treasury and the Internal Revenue Service relating to the program;
     3    (d)  make  changes to the program required for the participants in the
     4  program to obtain the state income tax benefits or treatment provided by
     5  this article;
     6    (e) charge, impose and collect administrative fees and service charges
     7  in connection with any agreement, contract or  transaction  relating  to
     8  the program;
     9    (f) develop marketing plans and promotion materials;
    10    (g)  establish the methods by which the funds held in such accounts be
    11  dispersed;
    12    (h) establish the method by which funds shall be allocated to pay  for
    13  administrative costs; and
    14    (i)  do  all  things necessary and proper to carry out the purposes of
    15  this article.
    16    § 1254. Powers of the comptroller. 1. The  comptroller  may  implement
    17  the  program through use of financial organizations as account deposito-
    18  ries and managers. Under the program, an  account  owner  may  establish
    19  accounts directly with an account depository.
    20    2.  The comptroller may solicit proposals from financial organizations
    21  to act as depositories and managers of the program. Financial  organiza-
    22  tions  submitting  proposals  shall  describe  the investment instrument
    23  which will be held in accounts.  The comptroller shall select as program
    24  depositories and managers the financial  organization,  from  among  the
    25  bidding  financial organizations that demonstrates the most advantageous
    26  combination, both to potential program participants and this  state,  of
    27  the following factors:
    28    (a) financial stability and integrity of the financial organization;
    29    (b) the safety of the investment instrument being offered;
    30    (c) the ability of the investment instrument to track increasing costs
    31  of residential housing;
    32    (d) the ability of the financial organization to satisfy recordkeeping
    33  and reporting requirements;
    34    (e)  the  financial  organization's plan for promoting the program and
    35  the investment it is willing to make to promote the program;
    36    (f) the fees, if any, proposed to be charged to  persons  for  opening
    37  accounts;
    38    (g)  the  minimum  initial  deposit and minimum contributions that the
    39  financial organization will require;
    40    (h) the ability of banking organizations to  accept  electronic  with-
    41  drawals, including payroll deduction plans; and
    42    (i)  other  benefits  to  the  state  or its residents included in the
    43  proposal, including fees payable to the state to cover expenses of oper-
    44  ation of the program.
    45    3. The comptroller may enter into a contract with a  financial  organ-
    46  ization.  Such financial organization management may provide one or more
    47  types of investment instrument.
    48    4. The comptroller may select more than one financial organization for
    49  the program.
    50    5. A management contract shall include, at a minimum, terms  requiring
    51  the financial organization to:
    52    (a)  take  any  action required to keep the program in compliance with
    53  requirements of section twelve hundred fifty-five of  this  article  and
    54  any actions not contrary to its contract to manage the program to quali-
    55  fy  as  a  "first  home  savings  account"  under paragraph forty-two of
    56  subsection (c) of section six hundred twelve of the tax law;

        S. 4058--B                          5
 
     1    (b) keep adequate records of each account, keep  each  account  segre-
     2  gated  from  each  other  account,  and provide the comptroller with the
     3  information necessary to prepare  the  statements  required  by  section
     4  twelve hundred fifty-five of this article;
     5    (c)  compile and total information contained in statements required to
     6  be prepared under section twelve hundred fifty-five of this article  and
     7  provide such compilations to the comptroller;
     8    (d) if there is more than one program manager, provide the comptroller
     9  with  such  information  necessary  to determine compliance with section
    10  twelve hundred fifty-five of this article;
    11    (e) provide the comptroller or his designee access to  the  books  and
    12  records of the program manager to the extent needed to determine compli-
    13  ance with the contract;
    14    (f) hold all accounts for the benefit of the account owner;
    15    (g)  be  audited  at  least  annually  by  a  firm of certified public
    16  accountants selected by the program manager and that the results of such
    17  audit be provided to the comptroller;
    18    (h) provide the comptroller with copies of all regulatory filings  and
    19  reports  made  by it during the term of the management contract or while
    20  it is holding any accounts, other than confidential filings  or  reports
    21  that will not become part of the program. The program manager shall make
    22  available  for  review  by  the  comptroller the results of any periodic
    23  examination of such manager by any state or federal  banking,  insurance
    24  or  securities  commission,  except  to  the  extent that such report or
    25  reports may not be disclosed under applicable law or the rules  of  such
    26  commission; and
    27    (i)  ensure that any description of the program, whether in writing or
    28  through the use of any media, is consistent with the marketing  plan  as
    29  developed  pursuant  to  the provisions of section twelve hundred fifty-
    30  three of this article.
    31    6. The comptroller may provide that an audit shall be conducted of the
    32  operations and financial position of the program depository and  manager
    33  at  any time if the comptroller has any reason to be concerned about the
    34  financial position,  the  recordkeeping  practices,  or  the  status  of
    35  accounts of such program depository and manager.
    36    7.  During  the term of any contract with a program manager, the comp-
    37  troller shall conduct an examination of such manager and its handling of
    38  accounts. Such examination shall be conducted  at  least  biennially  if
    39  such  manager  is  not  otherwise subject to periodic examination by the
    40  superintendent of financial  services,  the  federal  deposit  insurance
    41  corporation or other similar entity.
    42    8.  (a)  If selection of a financial organization as a program manager
    43  or depository is not renewed, after the end of its term:
    44    (i) accounts previously established and held in investment instruments
    45  at such financial organization may be terminated;
    46    (ii) additional contributions may be made to such accounts;
    47    (iii) no new accounts may be placed with such financial  organization;
    48  and
    49    (iv) existing accounts held by such depository shall remain subject to
    50  all oversight and reporting requirements established by the comptroller.
    51    (b)  If  the  comptroller  terminates  a  financial  organization as a
    52  program manager or depository, he or she shall take custody of  accounts
    53  held  by such financial organization and shall seek to promptly transfer
    54  such accounts to another financial organization that is  selected  as  a
    55  program manager or depository and into investment instruments as similar
    56  to the original instruments as possible.

        S. 4058--B                          6
 
     1    9. The comptroller may enter into such contracts as it deems necessary
     2  and proper for the implementation of the program.
     3    §  1255.  Program  requirements;  first home savings account. 1. First
     4  home savings accounts established pursuant to  the  provisions  of  this
     5  article shall be governed by the provisions of this section.
     6    2.  A  first  home  savings  account  may  be opened by any person who
     7  desires to save money for  the  payment  of  the  qualified  first  home
     8  purchase  expenses  of  the  account owner or designated beneficiary. An
     9  account owner may designate another person as  successor  owner  of  the
    10  account  in  the  event of the death of the original account owner. Such
    11  person who opens an account or any successor owner shall  be  considered
    12  the account owner.
    13    (a) An application for such account shall be in the form prescribed by
    14  the program and contain the following:
    15    (i) the name, address and social security number or employer identifi-
    16  cation number of the account owner;
    17    (ii) the designation of a designated beneficiary;
    18    (iii)  the name, address, and social security number of the designated
    19  beneficiary; and
    20    (iv) such other information as the program may require.
    21    (b) The comptroller and the corporation may establish  a  nominal  fee
    22  for such application.
    23    3.  Any person, including the account owner, may make contributions to
    24  the account after the account is opened.
    25    4. Contributions to accounts may be made only in cash.
    26    5. An account owner may withdraw all or part of the  balance  from  an
    27  account  as  authorized  under  rules  governing the program. Such rules
    28  shall include provisions that will generally enable the determination as
    29  to whether a withdrawal is a  nonqualified  withdrawal  or  a  qualified
    30  withdrawal.
    31    6.  (a)  An  account owner may change the designated beneficiary of an
    32  account in accordance with procedures established by the  memorandum  of
    33  understating  pursuant  to  the  provisions  of  section  twelve hundred
    34  fifty-three of this article.
    35    (b) An account owner may transfer all or a portion of  an  account  to
    36  another first home savings account.
    37    (c)  Changes  in  designated  beneficiaries  and  transfers under this
    38  subdivision shall not be permitted to the extent that they  would  cause
    39  all  accounts for the same beneficiary to exceed the permitted aggregate
    40  maximum account balance.
    41    7. The program shall provide separate accounting for  each  designated
    42  beneficiary.
    43    8.  No account owner or designated beneficiary of any account shall be
    44  permitted to direct the investment of any contributions to an account or
    45  the earnings thereon more than two times in any calendar year.
    46    9. Neither an account owner nor a designated beneficiary  may  use  an
    47  interest in an account as security for a loan. Any pledge of an interest
    48  in an account shall be of no force and effect.
    49    10.  The  comptroller shall promulgate rules or regulations to prevent
    50  contributions on behalf of a designated  beneficiary  in  excess  of  an
    51  amount  that  would cause the aggregate account balance for all accounts
    52  for a designated beneficiary to exceed a  maximum  account  balance,  as
    53  established from time to time by the comptroller.
    54    11.  Contributions to a first home savings account shall be limited to
    55  one hundred thousand dollars per account. This  amount  shall  not  take

        S. 4058--B                          7
 
     1  into consideration any gain or loss to the principal investment into the
     2  account.
     3    12.  In the event that an individual makes a "nonqualified withdrawal"
     4  of monies from the first home savings account such individual shall have
     5  the entire account taxed, including  any  interest,  as  though  it  was
     6  income  at  the  account  owner's  federal tax rate in the tax years the
     7  monies were withdrawn, and incur an additional ten percent state penalty
     8  on the amount of earnings. In the event  account  owners  or  designated
     9  beneficiary  does not use the qualified residential housing as a primary
    10  residence for a period of not less than two years after the purchase  of
    11  such  housing,  the  account  owner shall have the entire account taxed,
    12  including any interest, as though it was ordinary income at the  account
    13  owner's  federal tax rate in the tax years the monies were withdrawn and
    14  incur an additional ten percent state penalty on the amount of earnings.
    15  For purposes of this article, the two year period  shall  begin  at  the
    16  time  title  is  transferred  to  the first time home buyer. The penalty
    17  shall be in addition to any taxes due pursuant to a non-qualified  with-
    18  drawal from a first home savings account.
    19    13.  Penalties may be waived by the commissioner if the individual can
    20  show proof that the reason the individual  did  not  use  the  qualified
    21  residential  housing as a primary residence for a period of two years or
    22  more after the purchase or construction was due to either:
    23    (a) an employment relocation outside the  state  and  such  relocation
    24  required the individual to become a resident of another state;
    25    (b) an unforeseeable emergency;
    26    (c) an absence due to qualifying military service; or
    27    (d) death.
    28    For  purposes  of this subdivision, an "unforeseeable emergency" shall
    29  mean a severe financial hardship resulting  from  illness,  accident  or
    30  property  loss  to the account owner, or his or her dependents resulting
    31  in circumstances beyond their control. The circumstances that constitute
    32  an unforeseeable financial emergency will depend on the  facts  of  each
    33  case,  however,  withdrawal  of  account  funds may not be made, without
    34  penalty, to the extent that such hardship  is  or  may  be  relieved  by
    35  either:
    36    (i) reimbursement or compensation by insurance or otherwise; or
    37    (ii)  liquidation  of the individual's assets to the extent the liqui-
    38  dation of such assets would not itself cause severe financial hardship.
    39    14. The commissioner and the comptroller are  directed  to  promulgate
    40  all  rules and regulations necessary to implement the provisions of this
    41  subsection and are hereby directed to establish, supervise and  regulate
    42  first home savings accounts authorized to be created by this section.
    43    15. (a) If there is any distribution from a first home savings account
    44  to any individual or for the benefit of any individual during a calendar
    45  year,  such  distribution  shall  be  reported  to  the Internal Revenue
    46  Service and the  account  owner,  the  designated  beneficiary,  or  the
    47  distributee to the extent required by federal law or regulation.
    48    (b)  Statements  shall be provided to each account owner at least once
    49  each year within sixty days after the end of the twelve month period  to
    50  which  they  relate. The statement shall identify the contributions made
    51  during a preceding twelve month period, the total contributions made  to
    52  the  account  through the end of the period, the value of the account at
    53  the end of such period, distributions made during such  period  and  any
    54  other  information  that the comptroller shall require to be reported to
    55  the account owner.

        S. 4058--B                          8
 
     1    (c) Statements and information relating to accounts shall be  prepared
     2  and filed to the extent required by federal and state tax laws.
     3    16.  An annual fee may be imposed upon the account owner for the main-
     4  tenance of the account.
     5    17. The program shall disclose the following information in writing to
     6  each account owner of a first home savings account:
     7    (a) the terms and conditions for establishing  a  first  home  savings
     8  account;
     9    (b) any restrictions on the substitution of beneficiaries;
    10    (c)  the person or entity entitled to terminate the first home savings
    11  agreement;
    12    (d) the period of time during which a beneficiary may receive benefits
    13  under the first home savings agreement;
    14    (e) the terms and conditions  under  which  money  may  be  wholly  or
    15  partially withdrawn from the program, including, but not limited to, any
    16  reasonable charges and fees that may be imposed for withdrawal;
    17    (f) the probable tax consequences associated with contributions to and
    18  distributions from accounts; and
    19    (g)  all  other  rights and obligations pursuant to first home savings
    20  agreements, and any  other  terms,  conditions,  and  provisions  deemed
    21  necessary  and appropriate by the terms of the memorandum of understand-
    22  ing entered into pursuant to section twelve hundred fifty-three of  this
    23  article.
    24    18.  First  home  savings agreements shall be subject to section four-
    25  teen-c of the banking law and the "truth-in-savings" regulations promul-
    26  gated thereunder.
    27    19. Nothing in this article or in any  first  home  savings  agreement
    28  entered  into pursuant to this article shall be construed as a guarantee
    29  by the state that the account owner or designated beneficiary will qual-
    30  ify for the purchase of a home.
    31    20. To establish that an account owner or designated beneficiary is  a
    32  first  time home buyer, the individual shall complete a form promulgated
    33  by the comptroller certifying, under the penalties of perjury, that such
    34  individual is a first time home buyer.
    35    21. An individual must not intend to use any portion of the real prop-
    36  erty purchased using the first home savings account funds in a trade  or
    37  business,  or as a vacation home or as an investment, except as an owner
    38  occupied multiple dwelling with no more than two rental units.
    39    22. Monies withdrawn from first home savings accounts and any interest
    40  which has accrued shall not be  considered  as  taxable  income  to  the
    41  account  owner  for  state personal income taxation purposes, so long as
    42  the monies are applied for the purchase or construction of  a  qualified
    43  first  home  purchase  by the account owner or designated beneficiary of
    44  the account.
    45    § 1256. Program limitations; first home savings account. 1. Nothing in
    46  this article shall be construed to:
    47    (a) give any designated beneficiary any rights or legal interest  with
    48  respect  to  an account unless the designated beneficiary is the account
    49  owner;
    50    (b) guarantee that the account owner or designated beneficiary will be
    51  financially qualified to purchase a home;
    52    (c) create state residency for an individual merely because the  indi-
    53  vidual is a designated beneficiary; or
    54    (d)  guarantee  that  amounts  saved  pursuant  to the program will be
    55  sufficient to cover the down payment or closing costs  pursuant  to  the
    56  purchase of a qualified first home.

        S. 4058--B                          9
 
     1    2.  (a) Nothing in this article shall create or be construed to create
     2  any obligation of the comptroller, the state, or any agency  or  instru-
     3  mentality of the state to guarantee for the benefit of the account owner
     4  or designated beneficiary with respect to:
     5    (i) the rate of interest or other return on any account; and
     6    (ii) the payment of interest or other return on any account.
     7    (b)  The  comptroller  by  rule or regulation shall provide that every
     8  contract, application, deposit slip or other similar document  that  may
     9  be used in connection with a contribution to an account clearly indicate
    10  that  the  account is not insured by the state and neither the principal
    11  deposited nor the investment return is guaranteed by the state.
    12    § 2. Subsection (b) of section 612 of the tax law is amended by adding
    13  a new paragraph 42 to read as follows:
    14    (42) (A) Excess distributions received during the taxable  year  by  a
    15  distributee  of  a  first home savings account established under the New
    16  York state first home savings program provided for under  article  twen-
    17  ty-eight  of  the private housing finance law, to the extent such excess
    18  distributions are deemed attributable to  the  deductible  contributions
    19  under paragraph forty-two of subsection (c) of this section.
    20    (B)  (i) The term "excess distributions" means distributions which are
    21  not:
    22    (I) qualified withdrawals within the meaning  of  subdivision  ten  of
    23  section twelve hundred fifty-two of the private housing finance law;
    24    (II)  withdrawals  made  as a result of the death or disability of the
    25  designated beneficiary within  the  meaning  of  subdivision  eleven  of
    26  section twelve hundred fifty-two of such law; or
    27    (III)  transfers  described  in  paragraph  (b)  of subdivision six of
    28  section twelve hundred fifty-five of such law.
    29    (ii) Excess distributions shall be deemed attributable  to  deductible
    30  contributions  to the extent the amount of any such excess distribution,
    31  when added to  all  previous  excess  distributions  from  the  account,
    32  exceeds the aggregate of all nondeductible contributions to the account.
    33    § 3. Subsection (c) of section 612 of the tax law is amended by adding
    34  two new paragraphs 42 and 43 to read as follows:
    35    (42) Contributions made during the taxable year by an account owner to
    36  a  first home savings account established under the New York state first
    37  home savings program provided for  under  article  twenty-eight  of  the
    38  private  housing  finance  law, to the extent not deductible or eligible
    39  for credit for federal  income  tax  purposes,  provided,  however,  the
    40  exclusion  provided for in this paragraph shall not exceed five thousand
    41  dollars for an individual or head of household, and for married  couples
    42  who  file  joint  tax  returns,  shall  not exceed ten thousand dollars;
    43  provided, further that such exclusion shall be  available  only  to  the
    44  account owner and not to any other person.
    45    (43) Distributions from a first home savings account established under
    46  the New York state first home savings program provided for under article
    47  twenty-eight  of the private housing finance law, to the extent includi-
    48  ble in gross income for federal income tax purposes.
    49    § 4. This act shall take effect on the one hundred eightieth day after
    50  it shall have become a law, and shall apply to taxable years  commencing
    51  on  or  after  the first of January next succeeding the date on which it
    52  shall have become law; provided, however,  that  effective  immediately,
    53  the commissioner of taxation and finance and the comptroller are author-
    54  ized  and  directed  to promulgate any rules or regulations necessary to
    55  implement the provisions of this act on its effective date on or  before
    56  such date.
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