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A04499
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
126
Session of
2023
INTRODUCED BY BIZZARRO, ZABEL, HILL-EVANS, CIRESI, SANCHEZ,
T. DAVIS, ISAACSON, D. WILLIAMS, PISCIOTTANO, GUENST,
DELLOSO, R. MACKENZIE, MADDEN, NEILSON, DEASY AND FREEMAN,
MARCH 7, 2023
REFERRED TO COMMITTEE ON COMMERCE, MARCH 7, 2023
AN ACT
Providing for the establishment of first-time homebuyer savings
accounts for first-time homebuyers in this Commonwealth; and
imposing duties on the Department of Revenue.
Establishing the First-time Homebuyer Savings Account Program
and the First-time Homebuyer Savings Account Program Fund;
and imposing duties on the Treasury Department.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Short title.
This act shall be known and may be cited as the Pennsylvania
First-Time Homebuyer Savings Account Act.
Section 2. Definitions.
The following words and phrases when used in this act shall
have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Account holder." An individual who establishes,
individually or jointly, a first-time homebuyer savings account.
"Allowable closing costs." A disbursement listed on a
settlement statement for the purchase of a single-family
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residence in this Commonwealth by a qualified beneficiary.
"Department." The Department of Revenue of the Commonwealth.
"Eligible costs." The down payment and allowable closing
costs for the purchase of a single-family residence in this
Commonwealth by a qualified beneficiary. The term does not
include costs incurred prior to the establishment of a first-
time homebuyer savings account.
"Financial institution." A bank, trust company, savings
institution, credit union, broker-dealer, insurance company and
mutual fund or similar entity authorized to do business in this
Commonwealth.
"First-time homebuyer." An individual who resides in this
Commonwealth and has not owned or purchased directly or through
a trust, limited liability company, partnership or other legal
entity, either individually or jointly, a single-family
residence during the three-year period prior to the purchase
date of a single-family residence.
"First-time homebuyer savings account." An account
established under section 3.
"Qualified beneficiary." A first-time homebuyer who is
designated as a qualified beneficiary by the account holder of
the first-time homebuyer savings account.
"Settlement statement." A statement of receipts and
disbursements from a real estate transaction, including a
statement prescribed under the Real Estate Settlement Procedures
Act of 1974 (Public Law 93-533, 88 Stat. 1724).
"Single-family residence." A single-family residence owned
and occupied by a qualified beneficiary as the qualified
beneficiary's principal residence, which may include a
manufactured home, trailer, mobile home or unit in a
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condominium, cooperative or planned community.
"Tax Reform Code of 1971." The act of March 4, 1971 (P.L.6,
No.2), known as the Tax Reform Code of 1971.
Section 3. Establishment of first-time homebuyer savings
account.
(a) Designation of first-time homebuyer savings account.--
Beginning six months after the effective date of this section,
an individual may open a first-time homebuyer savings account
with a financial institution.
(b) Designation of qualified beneficiary.--An account holder
shall designate no more than one first-time homebuyer as the
qualified beneficiary of a first-time homebuyer savings account.
The account holder may designate himself as the qualified
beneficiary and may change the designated qualified beneficiary
at any time. The account holder shall declare the qualified
beneficiary on the annual personal income tax return required
under the Tax Reform Code of 1971 for the tax year in which the
first-time homebuyer savings account is established and for any
year in which the qualified beneficiary is changed.
(c) Use of first-time homebuyer savings account.--Money from
a first-time homebuyer savings account may only be used to pay
or reimburse a qualified beneficiary's eligible costs for the
purchase of a single-family residence in this Commonwealth.
(d) Expenses.--The account holder may not use money held in
a first-time homebuyer savings account to pay expenses of
administering the account, except that a service fee may be
deducted from the account by a financial institution in which
the first-time homebuyer savings account is held.
(e) Joint account holders.--An account holder may jointly
own a first-time homebuyer savings account with another person
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if the joint account holders file a joint personal income tax
return under Article III of the Tax Reform Code of 1971.
(f) Qualified beneficiary of more than one account.--An
individual may be designated as the qualified beneficiary on
more than one first-time homebuyer savings account.
(g) Contributions to account.--
(1) Subject to the limitations under section 4(d), an
individual other than the account holder may contribute to a
first-time homebuyer savings account.
(2) The maximum amount of all contributions to a first-
time homebuyer savings account is $150,000.
(h) Transfer of money.--An account holder may withdraw money
from a first-time homebuyer savings account and deposit the
money into a new first-time homebuyer savings account held by
the same or a different financial institution.
Section 4. Deduction and exclusion from taxable income.
(a) Deduction of contributions.--Except as otherwise
provided under subsection (c), the amount contributed by an
account holder to a first-time homebuyer savings account during
each tax year:
(1) may not exceed $5,000 for an account holder who
files an individual personal income tax return or $10,000 for
joint account holders who file a joint personal income tax
return; and
(2) shall be deductible, up to the contribution limits
under paragraph (1), from the taxable income of the account
holder under Article III of the Tax Reform Code of 1971
during the tax year the contribution was made.
(b) Exclusion of earnings.--Except as otherwise provided
under subsection (c), the amount of earnings on a first-time
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homebuyer savings account during the tax year may be excluded
from the taxable income of an account holder under Article III
of the Tax Reform Code of 1971.
(c) Limitations on deductions and exclusions.--An account
holder may claim a deduction and exclusion under this section:
(1) for a period of no more than 10 years;
(2) for an aggregate amount of principal and earnings
not to exceed $50,000 within 10 years; and
(3) except as otherwise provided in section 3(h), only
if the principal and earnings of a first-time homebuyer
savings account remain in the account until a withdrawal is
made for the eligible costs relating to the purchase of a
single-family residence by a qualified beneficiary.
(d) Nonaccount holders.--An individual other than the
account holder who deposits money into a first-time homebuyer
savings account under section 3(g) is not entitled to the
deduction and exclusion provided for under this section.
(e) Remaining money.--Money in a first-time homebuyer
savings account not expended on eligible costs before expiration
of the 10-year period under subsection (c)(1) shall be included
in the account holder's taxable income under Article III of the
Tax Reform Code of 1971.
(f) Application to alternative basis taxation.--The
deduction and exclusion from taxable income shall apply to any
alternative basis for calculating taxable income under Article
III of the Tax Reform Code of 1971.
Section 5. Reporting.
The account holder shall submit to the department all of the
following:
(1) Upon a withdrawal of money from a first-time
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homebuyer savings account, a detailed record of the eligible
costs toward which the money was applied and a statement of
the amount of money remaining in the account.
(2) With the account holder's personal income tax
return:
(i) information regarding the first-time homebuyer
savings account, including a list of transactions for the
account during the tax year; and
(ii) the Form 1099 issued by the financial
institution holding the account.
(3) Any other information as required by the department.
Section 6. Financial institutions.
(a) Limitations on financial institutions.--A financial
institution may not be required or be held liable to do any of
the following:
(1) Designate an account as a first-time homebuyer
savings account or designate a qualified beneficiary of an
account in a financial institution's account contracts or
systems.
(2) Track the use of money withdrawn from a first-time
homebuyer savings account.
(3) Allocate money in a first-time homebuyer savings
account among joint account holders or multiple qualified
beneficiaries.
(4) Report any information to the department or any
other governmental agency that is not otherwise required by
law.
(5) Determine if an account satisfies the requirements
to be a first-time homebuyer savings account.
(6) Ensure that money in a first-time homebuyer savings
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account is used for eligible costs.
(7) Report or remit taxes or penalties related to the
use of a first-time homebuyer savings account.
(b) Distribution of money.--Upon proof of the death of the
account holder, a financial institution shall distribute the
account in accordance with the contract terms governing the
first-time homebuyer savings account.
Section 7. Withdrawal for purpose other than eligible costs.
Except as permitted under section 3(h), if an account holder
or beneficiary withdraws any amount from a first-time homebuyer
savings account and uses the withdrawal for a purpose other than
eligible costs:
(1) The entire amount withdrawn shall be included in the
account holder's taxable income as interest income under
Article III of the Tax Reform Code of 1971 for the tax year
the withdrawal was made.
(2) The account holder or beneficiary shall pay to the
department a penalty equal to 10% of the amount
withdrawn. The penalty may not apply to money withdrawn from
an account that was:
(i) withdrawn by reason of the account holder's or
the beneficiary's death or disability; or
(ii) a disbursement of assets of the account
pursuant to a filing for protection under 11 U.S.C.
(relating to Bankruptcy).
Section 8. Department of Revenue.
(a) Duties.--The department shall prepare forms:
(1) to designate an account with a financial institution
to serve as a first-time homebuyer savings account;
(2) to designate a qualified beneficiary of a first-time
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homebuyer savings account; and
(3) for an account holder to annually submit to the
department detailed information regarding the first-time
homebuyer savings account, including, but not limited to, a
list of transactions for the account during the tax year and
identifying any supporting documentation that is required to
be maintained by the account holder.
(b) Rules and regulations.--The department may promulgate
rules and regulations necessary to administer and enforce this
act.
Section 9. Effective date.
This act shall take effect in 60 days.
Section 1. Short title.
This act shall be known and may be cited as the First-Time
Homebuyer Savings Account Program Act.
Section 2. Definitions.
The following words and phrases when used in this act shall
have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Account." A first-time homebuyer savings account
established under section 6.
"Account holder." An individual who establishes,
individually or jointly, an account.
"Allowable closing costs." A disbursement listed on a
settlement statement for the purchase of a single-family
residence in this Commonwealth by a qualified beneficiary.
"Bureau." The Bureau of Savings Programs established under
section 3.
"Department." The Treasury Department of the Commonwealth.
"Disability." The inability to engage in any substantial
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activity because of medically determinable physical or mental
impairment that can be expected to result in death or to be of
long-continued and indefinite duration.
"Eligible costs." The down payment and allowable closing
costs for the purchase of a single-family residence in this
Commonwealth by a qualified beneficiary. The term does not
include costs incurred prior to the establishment of an account.
"Financial institution." A bank, trust company, savings
institution, credit union, broker-dealer, insurance company or
mutual fund or similar entity authorized to do business in this
Commonwealth.
"First-time homebuyer." An individual who resides in this
Commonwealth, is certified as a first-time homebuyer and has not
owned or purchased directly or through a trust, limited
liability company, partnership or other legal entity, either
individually or jointly, a single-family residence in this
Commonwealth or another state.
"Fund." The First-time Homebuyer Savings Account Program
Fund established under section 4.
"Program." The First-time Homebuyer Savings Account Program
established under section 4.
"Qualified beneficiary." A first-time homebuyer who is
designated as a qualified beneficiary by the account holder of
an account.
"Settlement statement." A statement of receipts and
disbursements from a real estate transaction, including a
statement prescribed under 12 U.S.C. Ch. 27 (relating to real
estate settlement procedures).
"Single-family residence." A single-family residence owned
and occupied by a qualified beneficiary as the qualified
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beneficiary's principal residence, which may include a townhome,
a manufactured home, trailer, mobile home or unit in a
condominium, cooperative or planned community.
"Tax Reform Code of 1971." The act of March 4, 1971 (P.L.6,
No.2), known as the Tax Reform Code of 1971.
Section 3. Bureau of Savings Programs.
The Bureau of Savings Programs is established within the
department to administer the program.
Section 4. First-time Homebuyer Savings Account Program.
(a) Establishment.--The Bureau of Savings Programs is
established within the department to administer the program.
(b) Purpose.--The program shall allow an individual to open
an account under section 6 for a qualified beneficiary. An
individual may contribute money into an account to save for
eligible costs.
(c) Application.--The application for the program shall be
on a form and in a manner prescribed by the department. The
department shall make the application available on the
department's publicly accessible Internet website.
(d) Fund.--The First-time Homebuyer Savings Account Program
Fund is established in the department. The following apply:
(1) The fund shall consist of:
(i) All contributions made by account holders and
all interest, earnings and additions to the fund.
(ii) Any other money, public or private,
appropriated or made available to the department for the
fund from any source and all interest, earnings and
additions to the fund.
(2) The department shall annually submit to the General
Assembly a budget request outlining the operating and
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administrative expenses of the program. Upon appropriation by
the General Assembly, expenses incurred by the department and
the bureau shall be paid from the fees, charges and
investment earnings of money in the fund.
(3) Assets of the fund shall be preserved, invested and
expended solely for the purposes specified in this act.
(4) The department shall repay from the fees, charges
and investment earnings of the fund to the General Fund any
money appropriated for the initial planning, organization and
administration of the program. The repayment must occur
within a 10-year period commencing on September 1, 2030.
Notwithstanding any other provision of law, the department
may not pledge the credit or taxing powers of the
Commonwealth. Any obligation of debt under this section shall
not be deemed an obligation or debt of the Commonwealth, nor
shall the Commonwealth be liable to pay principal and
interest on obligations or to offset any loss of principal
and interest earnings on investments made by the department.
(5) The policies governing the investment of the fund
shall be directed to obtaining sufficient income to meet the
fund's obligations under this act, maintaining necessary
reserves and covering operating expenses. The policies
governing the fund shall be directed to providing for an
appropriate balance of risk, liquidity and return
commensurate with the management of a prudent investor. The
department, its investment managers, program managers and
trustees shall have the authority to invest and reinvest
money in the fund. The department may use a third party to
invest the assets and maintain the fund.
Section 5. First-time Homebuyer Savings Account Advisory Board.
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(a) Establishment.--The First-time Homebuyer Savings Account
Advisory Board is established within the department.
(b) Composition of board.--The board shall consist of the
following members:
(1) The Governor or a designee.
(2) The State Treasurer or a designee.
(3) Four members who have knowledge, skill and expertise
in financial planning and saving for retirement as follows:
(i) one appointed by the President pro tempore of
the Senate;
(ii) one appointed by the Speaker of the House of
Representatives;
(iii) one appointed by the Minority Leader of the
Senate; and
(iv) one appointed by the Minority Leader of the
House of Representatives.
(c) Chairperson.--The State Treasurer, or a designee, shall
serve as chairperson of the board.
(d) Terms of board members.--Each appointed board member
shall serve a term of four years.
(e) Vacancy.--A vacancy on the board shall be filled for the
unexpired term of an appointed member of the board in the same
manner as the original appointment.
(f) Meetings of board.--
(1) The State Treasurer, or the designee, shall call the
organizational meeting of the board.
(2) Meetings of the board shall be held at the call of
the chairperson.
(g) Employees.--The department shall have the power and its
duty shall be to provide the board with experts, stenographers
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and assistants as necessary to carry out the work of the board.
The board may enlist voluntary assistance, research
organizations and other agencies.
(h) Duties.--The board shall:
(1) Study and review the work of the program.
(2) Advise the department upon request.
(3) Make recommendations on board initiatives for the
improvement of the program.
(4) Make interim reports as the board deems advisable.
(i) Prohibitions.--A board member may not:
(1) Directly or indirectly have an interest in the
making of an investment under the program or in gains or
profits accruing from an investment under the program.
(2) Borrow program-related money or deposits or use
program-related money or deposits in any manner.
(3) Become an endorser, surety or obligor on an
investment made under the program.
Section 6. First-time homebuyers savings account.
(a) Approval.--The bureau shall review an application
submitted by an individual for an account and, if approved by
the bureau, the individual may establish an account.
(b) Designation of qualified beneficiary.--An account holder
may designate one first-time homebuyer as the qualified
beneficiary of an account. The account holder may designate
themself as the qualified beneficiary and may change the
designated qualified beneficiary at any time. The account holder
shall declare the qualified beneficiary on the annual personal
income tax return required under the Tax Reform Code of 1971 for
the tax year in which the account is established and for any
year in which the qualified beneficiary is changed.
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(c) Use of account.--Money from an account may only be used
to pay or reimburse a qualified beneficiary's eligible costs for
the purchase of a single-family residence in this Commonwealth.
(d) Joint account holders.--An account holder may jointly
own an account with another individual if the joint account
holders file a joint personal income tax return under Article
III of the Tax Reform Code of 1971.
(e) Qualified beneficiary of more than one account.--An
individual may be designated as the qualified beneficiary on
more than one account.
(f) Contributions to account.--
(1) Subject to the limitations under section 7(d), an
individual other than the account holder may contribute to an
account.
(2) The maximum amount of all contributions to an
account shall be $150,000.
Section 7. Deduction and exclusion from taxable income.
(a) Deduction of contributions.--Except as provided under
subsection (c), the amount contributed by an account holder to
an account during each tax year:
(1) May not exceed $5,000 for an account holder who
files an individual personal income tax return or $10,000 for
joint account holders who file a joint personal income tax
return.
(2) Shall be deductible, up to the contribution limits
under paragraph (1), from the taxable income of the account
holder under Article III of the Tax Reform Code of 1971
during the tax year the contribution was made.
(b) Exclusion of earnings.--Except as provided under
subsection (c), the amount of earnings on an account during the
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tax year may be excluded from the taxable income of an account
holder under Article III of the Tax Reform Code of 1971.
(c) Limitations on deductions and exclusions.--An account
holder may claim a deduction and exclusion under this section:
(1) For a period of no more than 10 years.
(2) For an aggregate amount of principal and earnings
not to exceed $50,000 for individual personal income tax
filers and $100,000 for joint personal income tax filers
within 10 years.
(3) If the principal and earnings of an account remain
in the account until a withdrawal is made for the eligible
costs relating to the purchase of a single-family residence
by a qualified beneficiary.
(d) Nonaccount holders.--An individual other than the
account holder who deposits money into an account under section
6(f) is not entitled to the deduction and exclusion provided for
under this section.
(e) Remaining money.--Money in an account not expended on
eligible costs before expiration of the 10-year period under
subsection (c)(1) shall be included in the account holder's
taxable income under Article III of the Tax Reform Code of 1971.
(f) Application to alternative basis taxation.--The
deduction and exclusion from taxable income shall apply to any
alternative basis for calculating taxable income under Article
III of the Tax Reform Code of 1971.
Section 8. Distribution of money.
Upon proof of death of an account holder, a financial
institution shall distribute the account in accordance with the
contract terms governing the account.
Section 9. Withdrawal for purpose other than eligible costs.
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If an account holder or qualified beneficiary withdraws any
amount from an account and uses the withdrawal for a purpose
other than eligible costs:
(1) The entire amount withdrawn shall be included in the
account holder's taxable income as interest income under
Article III of the Tax Reform Code of 1971 for the tax year
the withdrawal was made.
(2) The account holder or qualified beneficiary shall
pay to the Department of Revenue a penalty equal to 10% of
the amount withdrawn. The penalty may not apply to money
withdrawn from an account that was:
(i) withdrawn by reason of the account holder's or
the qualified beneficiary's death or disability; or
(ii) a disbursement of assets of the account
pursuant to a filing for protection under 11 U.S.C.
(relating to bankruptcy).
Section 10. Effective date.
This act shall take effect in one year.
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