Establishes the New York state first home savings program to authorize first time home buyers to establish savings accounts to buy their first home

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 regulations. 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the entire account would be taxed, including any interest, as though it were income in the tax years the monies were withdrawn. Penalties may be waived by the Commissioner of Taxation and Finance, if the individual can show proof that the reason the individual did not use the qualified residential housing as a primary residence for a period of two years or more was due to employment relocation outside of the State, or an unforeseeable financial emergency.

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 individual 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 Monies withdrawn from a New York First Home Savings account and any interest which has accrued shall not be considered as income to the individual and taxed as such if the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 individual shall be able to deduct annually from his or her federal adjusted gross income an amount, not to exceed five thousand dollars, deposited into a New York State First Home Savings account, An individual and his or her spouse shall jointly be entitled to a maximum deduction of ten thousand dollars.

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, manufactured homes, condominiums and cooperative housing units.

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

New bill.

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.