,i #aacth ,,congress #ast ,session ,h4 ,r4 #bibi ,,in ,,the ,,house ,,of ,,representatives ,august #a1 #bjac ,mr4 ,carney 7for himself1 ,mr4 ,heck of ,nevada1 ,mr4 ,webster of ,florida1 and ,mr4 ,welch7 introduced the following bill2 which was referred to the ,committee on ,ways and ,means ,a ,,bill ,to amend the ,internal ,revenue ,code of #aihf to allow a deduction for contributions to tax-exempt ,housing ,equity ,savings ,accounts4 #a4 ,short title ,this ,act may be cited as the ,creating ,homeownership ,opportunity ,act of #bjac4 #b4 ,housing equity savings accounts 7a7 ,in general ,part ,,vii of subchapter ,b of chapter #a of the ,internal ,revenue ,code of #aihf 7relating to additional itemized deductions for individuals7 is amended by redesignating section #bbd as section #bbe and by inserting after section #bbc the following new section3 #bbd4 ,housing equity savings accounts 7a7 ,deduction allowed ,in the case of an eligible individual1 there shall be allowed as a deduction the aggregate amount paid in cash during the taxable year by or on behalf of such individual to a housing equity savings account of such individual4 7b7 ,limitation ,the amount allowable as a deduction under subsection 7a7 for any taxable year shall not exceed the lesser of-- 7#a7 #aj1jjj1 or 7#b7 an amount equal to the compensation 7as defined in section #bai7;f77#a77 includible in the individual's gross income for such taxable year4 7c7 ,eligible individual ,for purposes of this section1 the term eligible individual means1 with respect to any taxable year1 any individual if such individual 7and if married1 such individual's spouse7 had no present ownership interest in a principal residence during the #c-year period ending at the close of the preceding taxable year4 7d7 ,housing equity savings account ,for purposes of this section1 the term housing equity savings account means a trust created or organized in the ,united ,states exclusively for the benefit of an individual1 but only if the written governing instrument creating the trust meets the following requirements3 7#a7 ,except in the case of rollover contributions from another housing equity savings account of such individual-- 7,a7 no contribution will be accepted unless it is in cash1 and 7,b7 contributions will not be accepted for the taxable year in excess of the dollar amount in effect for the taxable year under subsection 7b77#a74 7#b7 ,the trustee is a bank 7as defined in section #djh7n77 or such other person who demonstrates to the satisfaction of the ,secretary that the manner in which such other person will administer the trust will be consistent with the requirements of this section4 7#c7 ,no part of the trust funds will be invested in life insurance contracts4 7#d7 ,the interest of an individual in the balance in his account is nonforfeitable4 7#e7 ,the assets of the trust will not be commingled with other property except in a common trust fund or common investment fund4 7e7 ,tax treatment of distributions 7#a7 ,in general ,except as otherwise provided in this subsection1 any amount distributed out of a housing equity savings account shall be included in gross income of the distributee for the taxable year in which the distribution is received4 ,notwithstanding any other provision of this title 7including chapters #aa and #ab71 the basis of any person in such an account is zero4 7#b7 ,exception for amounts used to purchase principal residence and for certain payments to individual retirement accounts 7,a7 ,in general ,paragraph 7#a7 shall not apply to any distribution during the taxable year which would 7but for this paragraph7 be includible in gross income for such year to the extent that the aggregate of such distributions during the taxable year do not exceed the aggregate qualified payments made by the account beneficiary during such year4 7,b7 ,qualified payment ,for purposes of this paragraph1 the term qualified payment means-- 7i7 any payment of qualified acquisition costs 7as defined in section #gb7t77#h77;,c77 incurred with respect to the principal residence of the account beneficiary1 and 7ii7 any payment to an individual retirement account but only if-- 7,i7 the account beneficiary of the housing equity savings account from which the payment is made is also the beneficiary of the individual retirement account1 and 7,,ii7 the payment is a qualified ,,ira payment4 ,any payment described in clause 7ii7 shall be treated for purposes of this title as a rollover contribution to the individual retirement account4 7,c7 ,qualified ira payment ,for purposes of subparagraph 7,b71 the term qualified ,,ira payment means any payment if-- 7i7 the account beneficiary-- 7,i7 is an eligible individual at the time of the payment1 and 7,,ii7 attains age #ee as of the close of the taxable year during which the payment is made1 7ii7 the account beneficiary is-- 7,i7 an eligible individual at the time of the payment1 and 7,,ii7 has been an eligible individual throughout the #bj-year period ending on the date of the payment1 or 7iii7 the payment is made within #a year after the date of a payment described in subparagraph 7,b77i74 7#c7 ,exceptions for certain other distributions ,rules similar to the rules of paragraphs 7#c71 7#d71 7#e71 and 7#f7 of section #djh7;d7 shall apply for purposes of this section4 7#d7 ,additional tax on amounts included in gross income ,if any distribution from a housing equity savings account is includible in gross income of the account beneficiary1 the tax liability of such beneficiary under this chapter for the taxable year in which the distribution is received shall be increased by an amount equal to #bj percent of the amount of the distribution4 7f7 ,tax treatment of accounts 7#a7 ,exemption from tax ,a housing equity savings account is exempt from taxation under this subtitle unless such account has ceased to be a housing equity savings account by reason of paragraph 7#b74 ,notwithstanding the preceding sentence1 any such account is subject to the taxes imposed by section #eaa 7relating to imposition of tax on unrelated business income of charitable1 etc4 organizations74 7#b7 ,account terminations ,rules similar to the rules of paragraphs 7#b7 and 7#d7 of section #djh7;e7 shall apply to housing equity savings accounts1 and any amount treated as distributed under such rules shall be treated as not used to make payments described in subsection 7e77#b74 7g7 ,beneficiary must be under age #ee ,no deduction shall be allowed under this section with respect to any payment to a housing equity savings account for the benefit of an individual if such individual has attained age #ee before the close of such individual's taxable year for which the contribution was made4 7h7 ,other definitions and special rules 7#a7 ,other definitions ,for purposes of this section-- 7,a7 ,account beneficiary ,the term account beneficiary means the individual for whose benefit the housing equity savings account was established4 7,b7 ,principal residence ,the term principal residence has the same meaning as when used in section #aba1 except that such term shall include only residences located in the ,united ,states4 7#b7 ,cost-of-living adjustment 7,a7 ,in general ,in the case of any taxable year beginning in a calendar year after #bjae1 the dollar amount in subsection 7b77#a7 shall be increased by an amount equal to-- 7i7 such dollar amount1 multiplied by 7ii7 the cost-of-living adjustment determined under section #a7;f77#c7 for the calendar year in which such taxable year begins determined by substituting calendar year #bjad for calendar year #aiib in subparagraph 7,b7 thereof4 7,b7 ,rounding ,if any increase under subparagraph 7,a7 is not a multiple of #ej1 such increase shall be rounded to the nearest multiple of #ej4 7#c7 ,certain rules to apply ,rules similar to the following rules shall apply for purposes of this section3 7,a7 ,section #bai7;d77#b7 7relating to no deduction for rollovers74 7,b7 ,section #bai7;f77#c7 7relating to time when contributions deemed made74 7,c7 ,section #bai7;f77#e7 7relating to employer payments74 7,d7 ,section #djh7;g7 7relating to community property laws74 7,e7 ,section #djh7;h7 7relating to custodial accounts74 7i7 ,reports ,the trustee of a housing equity savings account shall make such reports regarding such account to the ,secretary and to the individual for whose benefit the account is maintained with respect to contributions1 distributions1 and such other matters as the ,secretary may by regulation prescribe4 ,the reports required by this subsection shall be filed at such time and in such manner1 and furnished to such individuals at such time and in such manner1 as may be required by such regulations4 4 7b7 ,deduction allowed in arriving at adjusted gross income ,subsection 7a7 of section #fb of such ,code is amended by inserting after paragraph 7#ba7 the following new paragraph3 7#bb7 ,housing equity savings account contributions ,the deduction allowed by section #bbd4 4 7c7 ,tax on excess contributions 7#a7 ,subsection 7a7 of section #digc of such ,code 7relating to tax on excess contributions to individual retirement accounts1 etc47 is amended by striking or at the end of paragraph 7#d71 by inserting or at the end of paragraph 7#e71 and by inserting after paragraph 7#e7 the following new paragraph3 7#f7 a housing equity savings account 7within the meaning of section #bbd7;d771 4 7#b7 ,section #digc of such ,code is amended by adding at the end the following new subsection3 7h7 ,excess contributions to housing equity savings accounts ,for purposes of this section1 in the case of housing equity savings accounts 7within the meaning of section #bbd7;d771 the term excess contributions means the sum of-- 7#a7 the excess 7if any7 of-- 7,a7 the aggregate amount contributed for the taxable year to the accounts 7other than rollover contributions71 over 7,b7 the amount allowable as a deduction under section #bbd for such contributions1 and 7#b7 the amount determined under this subsection for the preceding taxable year1 reduced by the sum of-- 7,a7 the distributions out of the accounts which were included in gross income under rules similar to the rules of section #djh7;d77#e7 which apply to such accounts by reason of section #bbd7;e77#c71 and 7,b7 the excess 7if any7 of-- 7i7 the maximum amount allowable as a deduction under section #bbd7;b7 for the taxable year1 over 7ii7 the amount contributed to the accounts for the taxable year4 ,for purposes of this subsection1 any contribution which is distributed out of the housing equity savings account in a distribution to which the rules similar to the rules of section #djh7;d77#d7 which apply to such accounts by reason of section #bbd7;e77#c7 shall be treated as an amount not contributed4 4 7d7 ,tax on prohibited transactions 7#a7 ,in general ,paragraph 7#a7 of section #dige7;e7 of such ,code 7relating to prohibited transactions7 is amended by striking or at the end of subparagraph 7,f71 by redesignating subparagraph 7,g7 as subparagraph 7,h71 and by inserting after subparagraph 7,f7 the following new subparagraph3 7,g7 a housing equity savings account described in section #bbd7;d71 or 4 7#b7 ,special rule ,subsection 7c7 of section #dige of such ,code is amended by adding at the end the following new paragraph3 7#g7 ,special rule for housing equity savings accounts ,an individual for whose benefit a housing equity savings account is established shall be exempt from the tax imposed by this section with respect to any transaction concerning such account 7which would otherwise be taxable under this section7 if section #bbd7;f77#b7 applies with respect to such transaction4 4 7e7 ,failure ,to provide reports on housing equity savings accounts ,paragraph 7#b7 of section #ffic7;a7 of such ,code 7relating to failure to provide reports on individual retirement accounts or annuities7 is amended by striking and at the end of subparagraph 7,d71 by striking the period at the end of subparagraph 7,e7 and inserting 1 and1 and by adding at the end the following new subparagraph3 7,f7 ,section #bbd7;i7 7relating to housing equity savings accounts74 4 7f7 ,clerical amendment ,the table of sections for part ,,vii of subchapter ,b of chapter #a of such ,code is amended by striking the item relating to section #bbd and inserting the following new items3 ,sec4 #bbd4 ,housing equity savings accounts4 ,sec4 #bbe4 ,cross references4 4 7g7 ,effective date ,the amendments made by this section shall apply to contributions for taxable years beginning after ,december #ca1 #bjac4