Current Status Introducing Body:
SenateBill Number: 269Primary Sponsor: WilsonCommittee Number: 02Type of Legislation: GBSubject: First Purchase Family Housing ActResiding Body: SenateCurrent Committee: Banking and InsuranceComputer Document Number: JIC/6728.HCIntroduced Date: 19930126Last History Body: SenateLast History Date: 19930126Last History Type: Introduced, read first time, referred to CommitteeScope of Legislation: StatewideAll Sponsors: Wilson Gregory Ryberg Richter Rose Russell Cork Courson ThomasType of Legislation: General Bill
Bill Body Date Action Description CMN Leg Involved ---- ------ ------------ ------------------------------ --- ------------ 269 Senate 19930126 Introduced, read first time, 02 referred to CommitteeView additional legislative information at the LPITS web site.
TO AMEND TITLE 34, CODE OF LAWS OF SOUTH CAROLINA, RELATING TO BANKING, FINANCIAL INSTITUTIONS, AND MONEY, BY ADDING CHAPTER 35, THE FIRST PURCHASE FAMILY HOUSING ACT, SO AS 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 chapter may be cited as the First Purchase Family Housing Act.
Section 34-35-20. (A) An individual is allowed as a deduction from South Carolina taxable income as defined in Chapter 7 of Title 12 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. No deduction may be taken for an amount on deposit in the account for less than six months before withdrawal. An amount deposited less than six months before the close of the taxable year may be taken as a deduction only for the next succeeding taxable year.
(B) For purposes of this chapter, 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, 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) of this subsection 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, an 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 this subsection does not apply to the distribution of a 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 chapter if:
(a) The distribution is received on or before the day prescribed by law including extensions of time for filing the individual's income tax return for the taxable year.
(b) No deduction is allowed under this chapter 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 South Carolina taxable income of the individual for the taxable year in which it is received.
(3) Item (1) of this subsection does not apply to the distribution of a 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 chapter and no deduction was allowed under this chapter 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 chapter, 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 South Carolina taxable income for the taxable year. If during a taxable year the individual uses the account or a 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 the Tax Commission requires. 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 the Tax Commission requires. The reports required by this subsection must be filed at the time and in the manner as the Tax Commission requires. 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) for the taxable year. A contribution which is distributed out of the individual house purchase account and a distribution to which item (2) of subsection (C) 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 Chapter 35 of Title 34 of the 1976 Code apply to individual house purchase accounts established in taxable years beginning after 1993.
SECTION 3. This act takes effect upon approval by the Governor.