Home Purchase Assistance Fund: personal income taxation: mortgage interest deduction.

Existing law requires the California Housing Finance Agency to administer, among other programs, a home purchase assistance program for the purpose of assisting low- and moderate-income homebuyers to qualify for the purchase of owner-occupied homes, with priority given to first-time homebuyers, subject to specified terms and requirements. Existing law also authorizes the agency to create its own home purchase assistance programs, home purchase assistance products, or both, on terms and conditions that the agency deems prudent. Existing law establishes the Home Purchase Assistance Fund and continuously appropriates moneys in that fund for expenditure for these home purchase assistance programs and for defraying administrative costs of the agency. The Personal Income Tax Law allows various deductions in computing the income that is subject to the taxes imposed by that law, including, in modified conformity with federal income tax laws, a deduction for a limited amount of interest paid on acquisition indebtedness, as defined, with respect to a qualified residence of the taxpayer. Existing law limits the aggregate amount treated as acquisition indebtedness for these purposes to $1,000,000, or $500,000 in the case of a married individual filing a separate return. Existing law specifies for these purposes that a qualified residence includes the taxpayer's principal residence and one other residence selected by the taxpayer, as provided. This bill, for taxable years beginning on or after January 1, 2022, would disallow the deduction of acquisition indebtedness with respect to a qualified residence of a taxpayer other than the principal residence. This bill would require the Franchise Tax Board, in consultation with the Department of Finance, to estimate the amount of additional revenue resulting from the above-described modifications made with respect to the calculation of taxable income under the Personal Income Tax Law by this bill and to notify the Controller of that amount, as provided. The bill would require the Controller, upon receipt of these notifications, to transfer an amount equal to the amount determined by the Franchise Tax Board from the General Fund to the Home Purchase Assistance Fund, as described above. By increasing the amount of money deposited in a continuously appropriated fund, this bill would make an appropriation.