| ||||||||||||||||||||
| ||||||||||||||||||||
| ||||||||||||||||||||
| ||||||||||||||||||||
| ||||||||||||||||||||
1 | AN ACT concerning State government.
| |||||||||||||||||||
2 | Be it enacted by the People of the State of Illinois,
| |||||||||||||||||||
3 | represented in the General Assembly:
| |||||||||||||||||||
4 | Section 1. Short title. This Act may be cited as the | |||||||||||||||||||
5 | First-Time Home Buyer Savings Program Act. | |||||||||||||||||||
6 | Section 5. Definitions. As used in this Act: | |||||||||||||||||||
7 | "Account holder" means an individual who establishes, | |||||||||||||||||||
8 | individually or jointly with one or more other individuals, an | |||||||||||||||||||
9 | account with a financial institution for which the account | |||||||||||||||||||
10 | holder claims a first-time home buyer savings account status | |||||||||||||||||||
11 | on his or her income tax return.
| |||||||||||||||||||
12 | "Allowable closing costs" means a disbursement listed on a | |||||||||||||||||||
13 | settlement statement for the purchase of a single-family | |||||||||||||||||||
14 | residence in this State by a qualified beneficiary.
| |||||||||||||||||||
15 | "Eligible costs" means the down payment and allowable | |||||||||||||||||||
16 | closing costs for the purchase of a single-family residence in | |||||||||||||||||||
17 | this State by a qualified beneficiary.
| |||||||||||||||||||
18 | "Financial institution" means any bank, trust company, | |||||||||||||||||||
19 | savings institution, industrial loan association, consumer | |||||||||||||||||||
20 | finance company, credit union, or any benefit association, | |||||||||||||||||||
21 | insurance company, safe deposit company, money market mutual | |||||||||||||||||||
22 | fund, broker, or similar entity authorized to do business in | |||||||||||||||||||
23 | this State.
|
| |||||||
| |||||||
1 | "First-time home buyer" means an individual who is a | ||||||
2 | resident of this State and has not owned or purchased, either | ||||||
3 | individually or jointly, a single-family residence during a | ||||||
4 | period of 3 years prior to the date of the purchase of a | ||||||
5 | single-family residence.
| ||||||
6 | "First-time home buyer savings account" or "account" means | ||||||
7 | an account with a financial institution that an account holder | ||||||
8 | designates as a first-time home buyer savings account on his | ||||||
9 | or her income tax return under this Act for the purpose of | ||||||
10 | paying or reimbursing eligible costs for the purchase of a | ||||||
11 | single-family residence in this State by a qualified | ||||||
12 | beneficiary.
| ||||||
13 | "Principal residence" means the one place where an owner | ||||||
14 | of the property has his or her true, fixed, and permanent home | ||||||
15 | to which, whenever absent, he or she intends to return and that | ||||||
16 | shall continue as a principal residence until another | ||||||
17 | principal residence is established. "Principal residence" | ||||||
18 | includes only that portion of a dwelling or unit in a | ||||||
19 | multiple-unit dwelling that is subject to ad valorem taxes and | ||||||
20 | that is owned and occupied by an owner of the dwelling or unit. | ||||||
21 | "Principal residence" also includes all of an owner's | ||||||
22 | unoccupied property classified as residential that is | ||||||
23 | adjoining or contiguous to the dwelling subject to ad valorem | ||||||
24 | taxes and that is owned and occupied by the owner. "Principal | ||||||
25 | residence" also includes all of an owner's unoccupied property | ||||||
26 | classified as timber-cutover real property that is adjoining |
| |||||||
| |||||||
1 | or contiguous to the dwelling subject to ad valorem taxes and | ||||||
2 | that is owned and occupied by the owner. Contiguity is not | ||||||
3 | broken by boundary between local tax collecting units, a road, | ||||||
4 | a right-of-way, or property purchased or taken under | ||||||
5 | condemnation proceedings by a public utility for power | ||||||
6 | transmission lines if the 2 parcels separated by the purchased | ||||||
7 | or condemned property were a single parcel prior to the sale or | ||||||
8 | condemnation. "Principal residence" also includes any portion | ||||||
9 | of a dwelling or unit of an owner that is rented or leased to | ||||||
10 | another person as a residence as long as that portion of the | ||||||
11 | dwelling or unit that is rented or leased is less than 50% of | ||||||
12 | the total square footage of living space in that dwelling or | ||||||
13 | unit. "Principal residence" also includes a life care | ||||||
14 | facility. "Principal residence" also includes property owned | ||||||
15 | by a cooperative housing corporation and occupied by tenant | ||||||
16 | stockholders. Property that qualified as a principal residence | ||||||
17 | shall continue to qualify as a principal residence for 3 years | ||||||
18 | after all or any portion of the dwelling or unit included in or | ||||||
19 | constituting the principal residence is rented or leased to | ||||||
20 | another person as a residence if all of the following | ||||||
21 | conditions are satisfied:
| ||||||
22 | (1) The owner of the dwelling or unit is absent while | ||||||
23 | on active duty in the armed forces of the United States. | ||||||
24 | (2) The dwelling or unit would otherwise qualify as | ||||||
25 | the owner's principal residence. | ||||||
26 | (3) The owner files an affidavit with the assessor of |
| |||||||
| |||||||
1 | the local tax collecting unit on or before May 1 attesting | ||||||
2 | that it is his or her intent to occupy the dwelling or unit | ||||||
3 | as a principal residence upon completion of active duty in | ||||||
4 | the armed forces of the United States. A copy of an | ||||||
5 | affidavit filed under this paragraph shall be forwarded to | ||||||
6 | the Office of the State Treasurer pursuant to a schedule | ||||||
7 | prescribed by the Office of the State Treasurer.
| ||||||
8 | "Program" means the First-Time Home Buyer Savings Program | ||||||
9 | established by this Act.
| ||||||
10 | "Qualified beneficiary" means a first-time home buyer who | ||||||
11 | is designated as the beneficiary of an account designated by | ||||||
12 | the account holder as a first-time home buyer savings account. | ||||||
13 | "Qualified withdrawal" means a withdrawal from an account | ||||||
14 | that is not subject to a penalty under this Act or taxation | ||||||
15 | under the Illinois Income Tax Act, and that is a withdrawal | ||||||
16 | from an account that is made at least one year after the | ||||||
17 | account was opened and designated as a first-time home buyer | ||||||
18 | savings account and the withdrawal is used to pay the eligible | ||||||
19 | costs of the qualified beneficiary incurred at least one year | ||||||
20 | after the account is designated.
| ||||||
21 | "Settlement statement" means the statement of receipts and | ||||||
22 | disbursements for a transaction related to real estate or an | ||||||
23 | executed sales agreement for the purchase of a manufactured | ||||||
24 | home being conveyed as personal property.
| ||||||
25 | "Single-family residence" means a single-family residence | ||||||
26 | owned and occupied by a qualified beneficiary as the qualified |
| |||||||
| |||||||
1 | beneficiary's principal residence. "Single-family residence" | ||||||
2 | includes a manufactured home, trailer, mobile home, | ||||||
3 | condominium unit, or cooperative.
| ||||||
4 | "Treasurer" means the State Treasurer. | ||||||
5 | Section 10. First-Time Home Buyer Savings Program. | ||||||
6 | (a) The First-Time Home Buyer Savings Program is | ||||||
7 | established in the Office of the State Treasurer. The | ||||||
8 | purposes, powers, and duties of the Program are vested in and | ||||||
9 | shall be exercised by the Treasurer or the designee of the | ||||||
10 | Treasurer.
| ||||||
11 | (b) Beginning January 1, 2023 through December 31, 2027, | ||||||
12 | any individual may open an account with a financial | ||||||
13 | institution and designate the account, in its entirety, as a | ||||||
14 | first-time home buyer savings account to be used to pay or | ||||||
15 | reimburse a qualified beneficiary's eligible costs for the | ||||||
16 | purchase of a single-family residence in this State. An | ||||||
17 | account holder shall designate a first-time home buyer as the | ||||||
18 | qualified beneficiary of the first-time home buyer savings | ||||||
19 | account. The account holder may designate himself or herself | ||||||
20 | as the qualified beneficiary and may change the designated | ||||||
21 | qualified beneficiary at any time, but there may not be more | ||||||
22 | than one qualified beneficiary at any one time.
| ||||||
23 | (c) An individual may jointly own a first-time home buyer | ||||||
24 | savings account with another person if the joint account | ||||||
25 | holders file a joint return under the Illinois Income Tax Act. |
| |||||||
| |||||||
1 | An individual may be the account holder of more than one | ||||||
2 | first-time home buyer savings account. However, an account | ||||||
3 | holder shall not have multiple accounts that designate the | ||||||
4 | same qualified beneficiary. An individual may be designated as | ||||||
5 | the qualified beneficiary on more than one first-time home | ||||||
6 | buyer savings account.
| ||||||
7 | (d) Only cash and marketable securities may be contributed | ||||||
8 | to a first-time home buyer savings account. Subject to the | ||||||
9 | limitation under Section 25, persons other than the account | ||||||
10 | holder may make contributions to a first-time home buyer | ||||||
11 | savings account. | ||||||
12 | Section 15. Use of funds; required documentation; rules; | ||||||
13 | deduction form; informational materials. | ||||||
14 | (a) The account holder is responsible for the use or | ||||||
15 | application of funds in a first-time home buyer savings | ||||||
16 | account. The account holder shall not use funds held in an | ||||||
17 | account to pay expenses of administering the account, except | ||||||
18 | that a service fee may be deducted from the account by a | ||||||
19 | financial institution in which the account is held. An account | ||||||
20 | holder may withdraw funds, in whole or in part, from a | ||||||
21 | first-time home buyer savings account and deposit the funds in | ||||||
22 | a new first-time home buyer savings account held by a | ||||||
23 | different financial institution or the same financial | ||||||
24 | institution. If necessary, an account holder or qualified | ||||||
25 | beneficiary may make a hardship withdrawal from the account |
| |||||||
| |||||||
1 | due to an immediate and heavy financial need of the account | ||||||
2 | holder or qualified beneficiary. However, the amount withdrawn | ||||||
3 | must be limited to the amount necessary to satisfy that need. A | ||||||
4 | hardship withdrawal is not a qualified withdrawal and will be | ||||||
5 | subject to taxation under the Illinois Income Tax Act. | ||||||
6 | (b) An account holder shall submit, with the account | ||||||
7 | holder's income tax return filed under the Illinois Income Tax | ||||||
8 | Act all of the following to the Office of the State Treasurer, | ||||||
9 | along with the form prescribed by the Office of the State | ||||||
10 | Treasurer under subsection (e):
| ||||||
11 | (1) Account statements that show the contributions | ||||||
12 | made during the tax year and the taxable interest or | ||||||
13 | earnings on the account in the tax year for which the | ||||||
14 | deduction is claimed.
| ||||||
15 | (2) The Form 1099 issued by the financial institution | ||||||
16 | for the account for the tax year for which the deduction is | ||||||
17 | claimed.
| ||||||
18 | (3) Upon a withdrawal of funds from a first-time home | ||||||
19 | buyer savings account, a copy of the real estate | ||||||
20 | settlement statement that shows that the withdrawal was | ||||||
21 | used for eligible costs.
| ||||||
22 | (c) An account holder shall maintain and keep, for a | ||||||
23 | period of at least 4 years, suitable records and | ||||||
24 | documentation, for each first-time home buyer savings account, | ||||||
25 | including, but not limited to, account statements for all | ||||||
26 | contributions and withdrawals made, a detailed list describing |
| |||||||
| |||||||
1 | the transactions for the account, and other pertinent records | ||||||
2 | and papers as required by the Office of the State Treasurer for | ||||||
3 | the administration of this Act. | ||||||
4 | (d) The Treasurer may adopt rules to implement the Program | ||||||
5 | in accordance with the Illinois Administrative Procedure Act. | ||||||
6 | The rules shall not apply to, or impose administrative, | ||||||
7 | reporting, or other obligations or requirements on, financial | ||||||
8 | institutions-related accounts for first-time home buyer | ||||||
9 | savings accounts.
| ||||||
10 | (e) The Office of the State Treasurer shall prescribe the | ||||||
11 | form and manner in which a taxpayer shall claim a deduction in | ||||||
12 | accordance with this Act and the Illinois Income Tax Act, on | ||||||
13 | his or her income tax return filed under the Illinois Income | ||||||
14 | Tax Act. The form shall include, at a minimum all of the | ||||||
15 | following:
| ||||||
16 | (1) The account holder's name.
| ||||||
17 | (2) The name of the qualified beneficiary.
| ||||||
18 | (3) The name of the financial institution and the | ||||||
19 | account number.
| ||||||
20 | (4) The beginning and end of the year balance of the | ||||||
21 | account.
| ||||||
22 | (5) The amount of the deduction claimed for the tax | ||||||
23 | year.
| ||||||
24 | (f) The Office of the State Treasurer may prepare and | ||||||
25 | distribute informational materials on the Program to financial | ||||||
26 | institutions and potential home buyers to publicize the |
| |||||||
| |||||||
1 | availability of the Program. | ||||||
2 | Section 20. Financial institutions duties and liability. | ||||||
3 | (a) A financial institution is not required to do any of | ||||||
4 | the following:
| ||||||
5 | (1) Designate an account as a first-time home buyer | ||||||
6 | savings account, or designate the qualified beneficiaries | ||||||
7 | of an account, in the financial institution's account | ||||||
8 | contracts or systems or in any other way.
| ||||||
9 | (2) Track the use of money withdrawn from a first-time | ||||||
10 | home buyer savings account.
| ||||||
11 | (3) Allocate funds in a first-time home buyer savings | ||||||
12 | account among joint account holders or multiple qualified | ||||||
13 | beneficiaries.
| ||||||
14 | (4) Report any information to the Office of the State | ||||||
15 | Treasurer that is not otherwise required by law.
| ||||||
16 | (b) A financial institution is not responsible or liable | ||||||
17 | for any of the following:
| ||||||
18 | (1) Determining or ensuring that an account satisfies | ||||||
19 | the requirements to be a first-time home buyer savings | ||||||
20 | account.
| ||||||
21 | (2) Determining or ensuring that funds in a first-time | ||||||
22 | home buyer savings account are used for eligible cost.
| ||||||
23 | (3) Reporting or remitting taxes or penalties related | ||||||
24 | to the use of a first-time home buyer savings account.
| ||||||
25 | (c) Upon being furnished proof of the death of the account |
| |||||||
| |||||||
1 | holder and any other information required by the contract | ||||||
2 | governing the first-time home buyer savings account, a | ||||||
3 | financial institution shall distribute the principal and | ||||||
4 | accumulated interest or other income in the account in | ||||||
5 | accordance with the terms of the contract governing the | ||||||
6 | account. | ||||||
7 | Section 25. Account balance, contributions and interests, | ||||||
8 | and qualified withdrawals. | ||||||
9 | (a) The maximum account balance limit for a first-time | ||||||
10 | home buyer savings account shall not exceed a maximum of | ||||||
11 | $50,000. Accounts may continue to accrue earnings if the total | ||||||
12 | balance has reached the maximum account balance limit and | ||||||
13 | shall not be considered to have exceeded the maximum account | ||||||
14 | balance limit under this subsection.
| ||||||
15 | (b) Contributions to and interest earned on a first-time | ||||||
16 | home buyer savings account are exempt from taxation as | ||||||
17 | provided in the Illinois Income Tax Act.
| ||||||
18 | (c) Qualified withdrawals made from first-time home buyer | ||||||
19 | savings accounts are exempt from taxation as provided in the | ||||||
20 | Illinois Income Tax Act. | ||||||
21 | Section 30. Penalties. | ||||||
22 | (a) If funds are withdrawn from an account for any purpose | ||||||
23 | other than the payment of eligible costs by or on behalf of a | ||||||
24 | qualified beneficiary, there is a penalty equal to 10% of the |
| |||||||
| |||||||
1 | amount withdrawn. The penalty shall be paid to the Office of | ||||||
2 | the State Treasurer.
| ||||||
3 | (b) The penalty does not apply if the funds withdrawn | ||||||
4 | satisfy any of the following:
| ||||||
5 | (1) Withdrawn by reason of the qualified beneficiary's | ||||||
6 | death or disability.
| ||||||
7 | (2) A disbursement of assets of the account pursuant | ||||||
8 | to a filing for protection under the United States | ||||||
9 | Bankruptcy Code, 11 U.S.C. Section 101 to 1330.
| ||||||
10 | (3) Transferred from an account established under this | ||||||
11 | Act into another account established under this Act for | ||||||
12 | the benefit of another qualified beneficiary as provided | ||||||
13 | in Section 15.
| ||||||
14 | (4) Withdrawn by reason of a hardship withdrawal as | ||||||
15 | provided in Section 15. | ||||||
16 | (5) Withdrawn by reason of qualified beneficiary who | ||||||
17 | is a service member who is transferred or deployed out of | ||||||
18 | this State on active duty pursuant to a permanent change | ||||||
19 | of station order and provides proof acceptable to the | ||||||
20 | Office of the State Treasurer that the qualified | ||||||
21 | beneficiary or his or her spouse is assigned to a duty | ||||||
22 | station outside this State under a permanent change of | ||||||
23 | station order.
| ||||||
24 | (c) As used in this Section:
| ||||||
25 | "Active duty" means active duty pursuant to an executive | ||||||
26 | order of the President of the United States, an act of |
| |||||||
| |||||||
1 | Congress, or an order of the Governor.
| ||||||
2 | "Armed forces" means means the army, air force, navy, | ||||||
3 | marine corps, coast guard, or other military force
designated | ||||||
4 | by Congress as a part of the armed forces of the United States.
| ||||||
5 | "Service member" means a member of the armed forces, a | ||||||
6 | reserve branch of the armed forces, or the Illinois National | ||||||
7 | Guard.
| ||||||
8 | Section 99. Effective date. This Act takes effect upon | ||||||
9 | becoming law.
|