Current Status Introducing Body:Senate Bill Number:360 Primary Sponsor:Wilson Committee Number:02 Type of Legislation:GB Subject:First Purchase Family Housing Act Residing Body:Senate Current Committee:Banking and Insurance Computer Document Number:360 Introduced Date:Jan 08, 1991 Last History Body:Senate Last History Date:Jan 08, 1991 Last History Type:Introduced and read first time, referred to Committee Scope of Legislation:Statewide All Sponsors:Wilson Rose Type of Legislation:General Bill
Bill Body Date Action Description CMN
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360 Senate Jan 08, 1991 Introduced and read first 02
time, referred to Committee
360 Senate Dec 10, 1990 Prefiled, referred to 02
Committee
View additional legislative information at the LPITS web site.
TO AUTHORIZE THE ESTABLISHMENT OF INDIVIDUAL HOUSING ACCOUNTS; TO EMPOWER FINANCIAL INSTITUTIONS TO HANDLE THE ACCOUNTS AND TO PROVIDE THAT CONTRIBUTIONS TO THE ACCOUNTS WHEN USED SOLELY IN CONNECTION WITH THE PURCHASE OF A FIRST PRINCIPAL RESIDENCE ARE TAX DEDUCTIBLE.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Title 34 of the 1976 Code is amended by adding:
Section 34-35-10. This act may be cited as the First Purchase Family Housing Act.
Section 34-35-20. (A) Any individual is allowed as a deduction annually an amount, not to exceed five thousand dollars, deposited into a first time house purchase account established for his benefit to provide funding for the purchase of his first principal residence together with all interest paid or accrued within the taxable year on the account. A married couple may deduct up to ten thousand dollars and may divide this amount in any manner as the parties desire for income tax purposes. No deduction may be taken for an amount on deposit in the account for less than six months before withdrawal. Any amount deposited less than six months before the close of the taxpayer's taxable year may be taken as a deduction only for the next succeeding taxable year.
(B) For purposes of this act, the term `individual house purchase account' means a trust created or organized for the exclusive benefit of an individual or, in the case of a married individual, for the exclusive benefit of the individual and his spouse jointly but only if the written governing instrument creating the trust meets the following requirements:
(1) Contributions may not be accepted for the taxable year in excess of five thousand dollars for a trust established for an individual or ten thousand dollars for a trust established for a married couple.
(2) The trustee is a bank or building and loan association, as defined in Section 34-1-10, Code of Laws of South Carolina, 1976, or a credit union chartered or supervised under federal law or the laws of this State whose accounts are insured by the Federal Deposit Insurance Corporation, the Federal Savings and Loan Insurance Corporation, the National Credit Union Administration, or any agency of this State or any federal agency established for the purpose of insuring accounts in these financial institutions. The financial institution must actively make residential real estate mortgage loans in this State.
(3) The assets of the trust may be invested only in savings or time deposits in amounts fully insured as prescribed in item (2) of this subsection. Funds held in the trust may be commingled for purposes of investment, but individual records must be maintained by the trustee for each individual house purchase account holder which show all transactions in detail.
(4) The entire interest of an individual or married couple for whose benefit the trust is maintained must be distributed to him, or them, not later than one hundred twenty months after the date on which the first contribution is made to the trust.
(5) Except as provided in item (2), subsection (C) of this section or subsection (D) in the case of a disability or death, the trustee shall distribute no part of the funds in the account unless it:
(a) certifies that the money is to be used for the purchase of a residence located in this State and it provides that the instrument of payment is payable to the mortgagor, construction contractor, or other vendor of the property purchased;
(b) notify the Tax Commission on forms prescribed by the Tax Commission of the amount withdrawn within ten days after the date of withdrawal.
(C)(1) Except as otherwise provided in this subsection, any amount paid or distributed out of an individual house purchase account must be included in gross income by the payee or distributee for the taxable year in which the payment or distribution is received unless the amount is used exclusively in connection with the first purchase of a principal residence in this State for the payee or distributee.
(2) Item (1) of subsection (C) of this section does not apply to the distribution of any contribution paid during a taxable year to an individual house purchase account to the extent that the contribution exceeds the amount allowable as a deduction under this act if:
(a) The distribution is received on or before the day prescribed by law including extensions of time for filing the individual's return for the taxable year.
(b) No deduction is allowed under this act with respect to the excess contribution.
(c) The distribution is accompanied by the amount of net income attributable to the excess contribution. This net income must be included in the gross income of the individual for the taxable year in which it is received.
(3) Item (1) of subsection (C) of this section does not apply to the distribution of any contribution paid during a taxable year to an individual house purchase account to the extent that the contribution exceeds the amount allowable as a deduction under this act and no deduction was allowed under this act with respect to the excess contribution.
(4) The transfer of an individual's interest in an individual house purchase account to his former spouse under a dissolution of marriage decree or under a written instrument incident to a dissolution of marriage is not considered a taxable transfer made by the individual and the interest, at the time of the transfer, is treated as an individual house purchase account of the transferee and not of the transferor. After the transfer, the account is treated, for purposes of this act, as maintained for the benefit of the spouse.
(D) If a distribution from an individual house purchase account to an individual for whose benefit the account was established is made and not used in connection with the first purchase of a principal residence in this State for the individual, the tax liability of the individual for the taxable year in which the distribution is received must be increased by an amount equal to ten percent of the amount of the distribution which is includable in his gross income for the taxable year. If during a taxable year the individual uses the account or any portion of the account as security for a loan, the portion used is treated as distributed to that individual. The liability may not be imposed if the payment or distribution is attributable to the taxpayer dying or becoming disabled. An individual is not considered disabled unless he furnishes proof of the disability in the form and manner as the Tax Commission may require. Upon the death of an individual for whose benefit the account had been established, the funds in the account are payable to the estate of the individual. If the account was held jointly by the decedent and a spouse of the decedent, the account must remain as the individual house purchase account of the surviving spouse.
(E) The trustee of an individual house purchase account shall make reports regarding the account to the Tax Commission and to the individual for whom the account is maintained with respect to contributions, distributions, and other matters as the Tax Commission may require. The reports required by this subsection must be filed at a time and in a manner as the Tax Commission may require. A person who fails to file a required report is subject to a penalty of ten dollars for each instance of failure to file.
(F) In the case of an individual house purchase account, the term `excess contributions' means the amount by which the amount contributed for the taxable year to the account exceeds the amount allowable as a contribution under item (1) of subsection (B) of this section for the taxable year. Any contribution which is distributed out of the individual house purchase account and a distribution to which item (2) of subsection (C) of this section applies must be treated as an amount not contributed.
There is imposed for each taxable year a tax not to exceed six percent of the value of the amount of the excess contributions to an individual's individual house purchase account."
SECTION 2. The provisions of this act shall apply to individual house purchase accounts established in tax years beginning after December 31, 1987.
SECTION 3. This act takes effect upon approval by the Governor.