Regular Session 2023-2024 House Bill 0126 P.N. 3434

PRIOR PRINTER'S NOS. 109, 3133

PRINTER'S NO. 3434

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, FREEMAN,

OTTEN, KUTZ, KINKEAD, GILLEN, BRENNAN AND KHAN, MARCH 7, 2023

AS AMENDED ON SECOND CONSIDERATION, HOUSE OF REPRESENTATIVES,

JUNE 27, 2024

AN ACT

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 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

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.

"INELIGIBLE USE." THE SALE OR LEASE OF A SINGLE-FAMILY

RESIDENCE WITHIN THREE YEARS OF THE SETTLEMENT DATE.

"Program." The First-time Homebuyer Savings Account Program

established under section 4.

"Qualified beneficiary." A first-time homebuyer who is

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designated as a qualified beneficiary by the account holder of

an account.

"SETTLEMENT DATE." THE DATE ON WHICH A SELLER IN A REAL

ESTATE TRANSACTION EXECUTES A DEED OR SIGNS A SETTLEMENT

STATEMENT, WHICHEVER OCCURS LATER, TO CONVEY TITLE TO A

PURCHASER.

"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

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.

on a form and in a manner prescribed by the department. The

department shall make the application available on the

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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

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.

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(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.

(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.

serve as chairperson of the board.

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(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

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.

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(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.

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

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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

tax year may be excluded from the taxable income of an account

holder under Article III of the Tax Reform Code of 1971.

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

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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.

(A) OTHER THAN ELIGIBLE COSTS.--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).

(B) INELIGIBLE COSTS.--IF AN ACCOUNT HOLDER OR QUALIFIED

BENEFICIARY WITHDRAWS ANY AMOUNT FROM AN ACCOUNT AND USES THE

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WITHDRAWAL FOR AN INELIGIBLE USE, 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. THE DEPARTMENT MAY

WAIVE THE TAXABLE INCOME REQUIREMENT UNDER THIS SUBSECTION IF

THE ACCOUNT HOLDER OR QUALIFIED BENEFICIARY USES THE WITHDRAWAL

FOR AN INELIGIBLE USE DUE TO ANY OF THE FOLLOWING:

(1) LOSS OF HOUSEHOLD INCOME AS A RESULT OF THE

TERMINATION OF EMPLOYMENT, WHICH WAS NOT CAUSED BY THE

PERSONAL ACTIONS OF THE ACCOUNT HOLDER OR QUALIFIED

BENEFICIARY.

(2) LOSS OF AN INCOME EARNER IN THE HOUSEHOLD.

(3) TRANSFER FOR EMPLOYMENT PURPOSES.

(4) ANY OTHER ECONOMIC OR PERSONAL HARDSHIP.

Section 10. Effective date.

This act shall take effect in one year.

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