SB 904 — AN ACT REQUIRING THE COMMISSIONER OF REVENUE SERVICES TO ESTABLISH A FIRST-TIME HOMEBUYER SAVINGS ACCOUNT PROGRAM AND ESTABLISHING A TAX DEDUCTION FOR CONTRIBUTIONS TO FIRST-TIME HOMEBUYER SAVINGS ACCOUNTS.

(4)LCO "Eligible4405 costs"\\PRDFS1\SCOUSERS\FORZANOF\WS\2019SB-00904-R1 meansof the14 downpaymentSB.docx andRaised allBill allowable LCO No.

4405904 1(4) of"Eligible 14costs" Raisedmeans Billthe No.904downpayment and all allowable closing costs paid or reimbursed by a qualified beneficiary to purchase a single-family residence in this state to serve as the qualified beneficiary's primary residence;

(10) "Settlement statement" means the statement of receipts and disbursements for a transaction related to real estate, including, but not limited to, a statement prescribed pursuant to the Real Estate SettlementLCO Procedures4405 Act{\\PRDFS1\SCOUSERS\FORZANOF\WS\2019SB-0092 of 1974,14 12R01-SB.docx USC} SectionRaised 2601Bill et seq., as LCO No.

4405904 2Settlement Procedures Act of 141974, Raised12 BillUSC No.904Section 2601 et seq., as amended from time to time, and regulations adopted thereunder;

Two individuals may jointly establish and serve as the account holders of a first-time homebuyer savings account, provided such account holders shall file a joint return for the income tax imposed under chapter 229 of the general statutes for each taxable year during which such account exists.LCO 4405 {\\PRDFS1\SCOUSERS\FORZANOF\WS\2019SB-0093 of 14 R01-SB.docx } Raised Bill No.

The904 accountexists. holder or account holders shall, not later than April LCO No.

4405The 3account ofholder 14or Raisedaccount Billholders No.904shall, not later than April fifteenth of the taxable year immediately following the taxable year during which such account holder or account holders established a first-time homebuyer savings account, designate the qualified beneficiary of such account.

(ii) The Internal Revenue Service Form 1099 issued by the depository financial institution for such first-time homebuyer savings account;LCO 4405 {\\PRDFS1\SCOUSERS\FORZANOF\WS\2019SB-0094 of 14 R01-SB.docx } Raised Bill No.

and904 LCOaccount; No.

4405and 4 of 14 Raised Bill No.904 (iii) If such account holder withdrew funds from such first-time homebuyer savings account during the taxable year that is the subject of such return, a detailed accounting of all eligible costs paid or reimbursed using such funds during such taxable year and the balance of funds remaining in such account.

(3) Upon receiving proof of the death of an account holder and all other information required by any contract governing a first-time homebuyer savings account established by the account holder, the depository financial institution shall distribute the funds in the first- timeLCO homebuyer4405 savings{\\PRDFS1\SCOUSERS\FORZANOF\WS\2019SB-00905 accountof in14 accordanceR01-SB.docx with} theRaised termsBill ofNo. such contract.

LCO904 No.time homebuyer savings account in accordance with the terms of such contract.

4405 5 of 14 Raised Bill No.904 (f) (1) Each account holder who withdraws funds from a first-time homebuyer savings account for any reason other than paying or reimbursing the qualified beneficiary of such account for eligible costs incurred by such qualified beneficiary shall be liable to this state for a civil penalty in an amount not to exceed ten per cent of the withdrawn amount.

(i) To the extent properly includable in gross income for federal income tax purposes, any income with respect to which taxation by anyLCO state4405 is{\\PRDFS1\SCOUSERS\FORZANOF\WS\2019SB-0096 prohibitedof by14 federalR01-SB.docx law;} Raised Bill No.

904 any state is prohibited by federal law;

LCO(iii) No.To the extent properly includable in gross income for federal income tax purposes, the amount of any refund or credit for overpayment of income taxes imposed by this state, or any other state of the United States or a political subdivision thereof, or the District of Columbia;

4405 6 of 14 Raised Bill No.904 (iii) To the extent properly includable in gross income for federal income tax purposes, the amount of any refund or credit for overpayment of income taxes imposed by this state, or any other state of the United States or a political subdivision thereof, or the District of Columbia;

(vii) To the extent properly includable in determining the net gain or loss from the sale or other disposition of capital assets for federal income tax purposes, any gain from the sale or exchange of obligations issued by or on behalf of the state of Connecticut, any political subdivision thereof, or public instrumentality, state or local authority, district or similar public entity created under the laws of the state of Connecticut,LCO in4405 the{\\PRDFS1\SCOUSERS\FORZANOF\WS\2019SB-0097 incomeof year14 suchR01-SB.docx gain} wasRaised recognized;Bill No.

(viii)904 AnyConnecticut, interestin on indebtedness incurred or continued to purchase or carry obligations or securities the interestincome onyear whichsuch isgain subjectwas torecognized; tax under this chapter but exempt from federal income tax, LCO No.

4405(viii) 7Any ofinterest 14on Raisedindebtedness Billincurred No.904or continued to purchase or carry obligations or securities the interest on which is subject to tax under this chapter but exempt from federal income tax, to the extent that such interest on indebtedness is not deductible in determining federal adjusted gross income and is attributable to a trade or business carried on by such individual;

(II) For taxable years commencing prior to January 1, 2019, for a person who files a return under the federal income tax as an unmarriedLCO individual4405 whose{\\PRDFS1\SCOUSERS\FORZANOF\WS\2019SB-0098 federalof adjusted14 grossR01-SB.docx income} forRaised suchBill taxable year is fifty thousand dollars or more, or as a married individual filing separately whose federal adjusted gross income for such taxable year is fifty thousand dollars or more, or for a husband and wife who file a return under the federal income tax as married LCO No.

4405904 8unmarried ofindividual 14whose Raisedfederal Billadjusted No.904gross income for such taxable year is fifty thousand dollars or more, or as a married individual filing separately whose federal adjusted gross income for such taxable year is fifty thousand dollars or more, or for a husband and wife who file a return under the federal income tax as married individuals filing jointly whose federal adjusted gross income from such taxable year is sixty thousand dollars or more or for a person who files a return under the federal income tax as a head of household whose federal adjusted gross income for such taxable year is sixty thousand dollars or more, an amount equal to the difference between the amount of Social Security benefits includable for federal income tax purposes and the lesser of twenty-five per cent of the Social Security benefits received during the taxable year, or twenty-five per cent of the excess described in Section 86(b)(1) of the Internal Revenue Code;

and (IV) For the taxable year commencing January 1, 2019, and each taxable year thereafter, for a person who files a return under the federal income tax as an unmarried individual whose federal adjusted gross income for such taxable year is seventy-five thousand dollars or more, or as a married individual filing separately whose federal adjustedLCO gross4405 income{\\PRDFS1\SCOUSERS\FORZANOF\WS\2019SB-00909 for such taxable year is seventy-five thousand dollars or more, or for a husband and wife who file a return under the federal income tax as married individuals filing jointly whose federal adjusted gross income from such taxable year is one hundred thousand dollars or more or for a person who files a return under the federal income tax as a head of household14 whoseR01-SB.docx federal} adjustedRaised LCOBill No.

4405904 9adjusted gross income for such taxable year is seventy-five thousand dollars or more, or for a husband and wife who file a return under the federal income tax as married individuals filing jointly whose federal adjusted gross income from such taxable year is one hundred thousand dollars or more or for a person who files a return under the federal income tax as a head of 14household Raisedwhose Billfederal No.904adjusted gross income for such taxable year is one hundred thousand dollars or more, an amount equal to the difference between the amount of Social Security benefits includable for federal income tax purposes and the lesser of twenty-five per cent of the Social Security benefits received during the taxable year, or twenty-five per cent of the excess described in Section 86(b)(1) of the Internal Revenue Code;

(xv) To the extent properly includable in gross income for federal income tax purposes of an account holder, as defined in section 31- 51ww,LCO interest4405 earned{\\PRDFS1\SCOUSERS\FORZANOF\WS\2019SB-00910 onof funds14 depositedR01-SB.docx in} theRaised individualBill developmentNo. account, as defined in section 31-51ww, of such account holder;

(xvi)904 To51ww, theinterest extentearned properlyon includablefunds deposited in the grossindividual incomedevelopment foraccount, federal income tax purposes of a designated beneficiary, as defined in section 3-123aa,31-51ww, interest,of dividendssuch oraccount capitalholder; gains earned on LCO No.

4405(xvi) 10To the extent properly includable in the gross income for federal income tax purposes of 14a Raiseddesignated Billbeneficiary, No.904as defined in section 3-123aa, interest, dividends or capital gains earned on contributions to accounts established for the designated beneficiary pursuant to the Connecticut Homecare Option Program for the Elderly established by sections 3-123aa to 3-123ff, inclusive;

(xx) To the extent properly includable in gross income for federal income tax purposes, (I) for the taxable year commencing January 1, 2015,LCO ten4405 per{\\PRDFS1\SCOUSERS\FORZANOF\WS\2019SB-0011 cent of the14 incomeR01-SB.docx received} fromRaised theBill state teachers' retirement system, (II) for the taxable years commencing January 1, 2016, January 1, 2017, and January 1, 2018, twenty-five per cent of the income received from the state teachers' retirement system, and (III) for the taxable year commencing January 1, 2019, and each taxable year thereafter, fifty per cent of the income received from the state teachers' retirement system or the percentage, if applicable, pursuant to clause LCO No.

4405904 112015, ten per cent of 14the Raisedincome Billreceived No.904from the state teachers' retirement system, (II) for the taxable years commencing January 1, 2016, January 1, 2017, and January 1, 2018, twenty-five per cent of the income received from the state teachers' retirement system, and (III) for the taxable year commencing January 1, 2019, and each taxable year thereafter, fifty per cent of the income received from the state teachers' retirement system or the percentage, if applicable, pursuant to clause (xxi) of this subparagraph;

(xxii)LCO The4405 amount{\\PRDFS1\SCOUSERS\FORZANOF\WS\2019SB-00912 of lost14 wagesR01-SB.docx and} medical,Raised travelBill andNo. housing expenses, not to exceed ten thousand dollars in the aggregate, incurred by a taxpayer during the taxable year in connection with the donation to another person of an organ for organ transplantation occurring on or after January 1, 2017;

(xxiii)904 To(xxii) theThe extentamount properlyof includablelost wages and medical, travel and housing expenses, not to exceed ten thousand dollars in grossthe incomeaggregate, forincurred federalby incomea taxtaxpayer purposes,during the amounttaxable year in connection with the donation to another person of anyan financialorgan assistancefor receivedorgan LCOtransplantation No.occurring on or after January 1, 2017;

4405(xxiii) 12To the extent properly includable in gross income for federal income tax purposes, the amount of 14any Raisedfinancial Billassistance No.received from the Crumbling Foundations Assistance Fund or paid to or on behalf of the owner of a residential building pursuant to sections 8-442 and 8-443;

904 from the Crumbling Foundations Assistance Fund or paid to or on behalf of the owner of a residential building pursuant to sections 8-442 and 8-443;

ThisLCO act4405 shall{\\PRDFS1\SCOUSERS\FORZANOF\WS\2019SB-00913 takeof effect14 asR01-SB.docx follows} andRaised shallBill amendNo. the following sections:

904 This act shall take effect as follows and shall amend the following sections:

2 July 1, 2019, and 12-701(a)(20)(B) applicable to taxable years commencing on or after January 1, 2019 INS Joint Favorable LCO No.4405 R01-SB.docx }OUSERS\FORZANOF\WS\2019SB-00904- 14 of 14

4405 13 of 14 Raised Bill No.

904 Statement of Purpose:

To require the Commissioner of Revenue Services to establish a first- time homebuyer savings account program and establish a tax deduction for contributions to first-time homebuyer savings accounts.

[Proposed deletions are enclosed in brackets.