HB1607: HB1607 Georgia First-Time Homebuyer's Savings Account Act; enact

26 LC 62 0522 House Bill 1607 By: Representatives Hilton of the 48th, Efstration of the 104th, Donatucci of the 105th, Silcox of the 53rd, Barrett of the 24th, and others A BILL TO BE ENTITLED AN ACT To amend Title 7 of the Official Code of Georgia Annotated, relating to banking and finance,1 so as to provide for the creation of first-time homebuyer savin gs accounts; to provide for2 contributions by account holders to accounts; to provide for tr ansfer of beneficiaries; to3 provide for annual reporting; to provide for certain exemptions from certain requirements for4 financial institutions; to provide for tax deductions; to provi de for tax deduction limits; to5 provide for unqualified withdrawal penalties and exceptions; to permit the Department of6 Revenue to impose penalties for fraudulent activity; to require the Department of Revenue7 to create certain forms; to provide for a short title; to provi de for purpose; to provide for8 definitions; to provide for related matters; to provide for an effective date and applicability;9 to repeal conflicting laws; and for other purposes.10 BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:11 SECTION 1.12 Title 7 of the Official Code of Georgia Annotated, relating to banking and finance, is13 amended by adding a new chapter to read as follows:14 H. B. 1607 - 1 - 26 LC 62 0522 "CHAPTER 1115 7-11-1.16 This chapter shall be known and may be cited as the 'Georgia Fi rst-Time Homebuyer's17 Savings Account Act.'18 7-11-2.19 The purpose of this Act is to encourage savings for homeownersh ip by residents of this20 state by providing tax incentives for contributions to dedicate d savings accounts used21 exclusively for qualified first-time home expenses, thereby pro moting homeownership,22 economic stability, and wealth-building opportunities for families of this state.23 7-11-3.24 As used in this chapter, the term:25 (1) 'Account holder' means an individual who establishes, indi vidually or jointly with26 one or more individuals, a first-time homebuyer savings account.27 (2) 'Beneficiary' means a first-time homebuyer who is designat ed as the qualified28 beneficiary of an account designated as a first-time homebuyer savings account.29 (3) 'Financial institution' means:30 (A) A bank;31 (B) A trust company;32 (C) A credit union;33 (D) A savings institution;34 (E) An industrial loan association;35 (F) A consumer finance company; or36 (G) Any benefit association, insurance company, safe deposit company, money market37 mutual fund, or similar entity authorized to do business in this state.38 H. B. 1607 - 2 - 26 LC 62 0522 (4) 'First-time homebuyer' means an individual who resides in this state and has not39 owned or purchased, either i ndividually or jointl y, a single-fa mily residence during a40 period of three years prior to the date of the purchase of a single-family residence.41 (5) 'First-time homebuyer savings account' or 'account' means an account with a financial42 institution that an account holder designates as a first-time homebuyer savings account.43 (6) 'Qualified first-time home expense' means any expense related to the purchase of a44 single-family residence in this state, including, but not limited to:45 (A) Down payment;46 (B) Closing costs;47 (C) Fees for title insurance, appraisal, and inspection services;48 (D) Loan origination fees;49 (E) Recording and transfer;50 (F) Attorney's fees related to the qualified home purchase;51 (G) Mortgage insurance premiums paid at closing;52 (H) Homeowner's insurance premiums paid at closing;53 (I) Property survey costs; and54 (J) Home warranty costs.55 (7) 'Qualified withdrawal' means a withdrawal of funds from a first-time homebuyer56 savings account.57 (8) 'Single-family residence' means a:58 (A) Detached single-family dwelling;59 (B) Townhouse or condominium unit;60 (C) Manufactured home or mobile home;61 (D) Cooperative unit; or62 (E) Multifamily dwelling with up to four units, provided that the beneficiary occupies63 one unit as his or her primary residence.64 H. B. 1607 - 3 - 26 LC 62 0522 (9) 'Unqualified withdrawal' means a withdrawal of funds from a first-time homebuyer65 savings account used for any purpose other than a qualified first-time home expense.66 7-11-4.67 (a) An individual may open an account with a financial institu tion and designate such68 account in its entirety as a first-time homebuyer savings account.69 (b) No later than April 15 of the year following the tax year the account was established,70 the account holder shall designate a beneficiary of the account. The account holder may71 designate himself or herself as the beneficiary and may change the beneficiary at any time;72 provided, however, that there shall be no more than one beneficiary at any time.73 (c) An individual may jointly own an account with another pers on if the joint account74 holders file a joint income tax return.75 (d) An individual may be the account holder of more than one account; provided, however,76 that an account holder shall not have multiple accounts that designate the same beneficiary.77 (e) An individual may be designated as the beneficiary on more than one account.78 (f) Only cash and marketable securities may be contributed to an account. Persons other79 than the account holder may contribute funds to an account. There is no limitation on the80 amount of contributions that may be made or retained in an account.81 (g) Funds held in an account shall not be used to pay the expenses of administering such82 account; provided, however that a service fee may be deducted f rom the account by a83 financial institution in which the account is held.84 7-11-5.85 An account holder shall submit the following information annually to the Department of86 Revenue:87 (1) Detailed information regarding the account, including, but not limited to, a list of88 transactions for the account during the tax year and the Form 1099 issued by the financial89 H. B. 1607 - 4 - 26 LC 62 0522 institution for such account with the account holder's state in come tax return on forms90 prepared by the Department of Revenue; and91 (2) A detailed account, including receipts, of the qualified f irst-time home expenses92 toward which the account funds were applied, if there was a withdrawal from the account,93 and a statement of the amount of funds remaining in the account, if any.94 7-11-6.95 (a) A financial institution shall not be required to:96 (1) Designate an account as a first-time homebuyer savings acc ount or designate the97 beneficiaries of an account;98 (2) Track the use of funds withdrawn from an account;99 (3) Allocate funds in an account among joint-account holders; or100 (4) Report any information to the Department of Revenue or any other governmental101 agency that is not otherwise required by law.102 (b) A financial institution shall not be liable for:103 (1) Determining that an account satisfies the requirements of this chapter;104 (2) Determining that account funds are used for qualified first-time home expenses; or105 (3) Reporting or remitting taxes or penalties related to the use of an account.106 7-11-7.107 (a) Account holders may deduct contributions made to an account during the taxable year108 from their state taxable income, subject to the following limitations:109 (1) Up to $6,000.00 for single filers or married individuals filing separately; or110 (2) Up to $12,000.00 for married couples filing jointly.111 (b) The total amount of contributions that may be deducted over the life of an account held112 by an account holder shall not exceed:113 H. B. 1607 - 5 - 26 LC 62 0522 (1) Up to $60,000.00 per beneficiary for single filers or marr ied individuals filing114 separately; or115 (2) Up to $120,000.00 per beneficiary for married couples filing jointly.116 (c) Interest, dividends, and other earnings generated by funds deposited in an account shall117 not be subject to state income tax, provided such earnings are used for qualified118 withdrawals.119 (d) The deduction provided for in this Code section shall be claimed as an adjustment to120 adjusted gross income on the account holder's state income tax return.121 (e) An account holder may claim the deduction provided for in this Code section for a122 period not to exceed 15 years.123 (f) Any funds in an account not expended on qualified first-time home expenses shall not124 be entitled to the deduction provided for in this Code section.125 7-11-8.126 (a) Any unqualified withdrawal shall result in:127 (1) The account holder adding to his or her taxable state income an amount equal to the128 lesser of:129 (A) The amount of the unqualified withdrawal; or130 (B) The amount of deductions previously claimed for contributions to the account;131 (2) The account holder paying a penalty equal to 10 percent of the amount added to his132 or her state taxable income pursuant to paragraph (1) of this subsection; or133 (3) Interest and earnings attributable to the unqualified with drawal shall be subject to134 state income tax.135 (b) Subsection (a) of this Code section shall not apply to unq ualified withdrawals made136 due to:137 (1) The death or disability of the beneficiary; or138 (2) The beneficiary ceasing to be a resident of this state due to military orders.139 H. B. 1607 - 6 - 26 LC 62 0522 (c) An account holder may transfer funds from one account to a new account without tax140 consequence. Only one such transfer shall be permitted within any 12 month period.141 7-11-9.142 The Department of Revenue may disallow deductions or impose pen alties for accounts143 established or used in a manner inconsistent with this chapter, including, but not limited144 to:145 (1) Accounts used primarily for tax avoidance;146 (2) False or fraudulent designations; and147 (3) Misrepresentation of qualified withdrawals.148 7-11-10.149 The Department of Revenue shall prepare forms for:150 (1) The designation of an account with a financial institution to serve as a first-time151 homebuyer savings account;152 (2) The designation of a beneficiary of an account; and153 (3) An annual submission to the Department of Revenue by the a ccount holder that154 provides detailed information regarding the account, including, but not limited to, a list155 of transactions for the account during the tax year, and identi fying any supporting156 documentation required to be maintained by the account holder."157 SECTION 2.158 This Act shall become effective on January 1, 2027, and shall a pply to all taxable years159 beginning on or after such date.160 SECTION 3.161 All laws and parts of laws in conflict with this Act are repealed.162 H. 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