SECTION 1. Definitions

''Eligible tenant'', a person who acquires occupancy, possession or control of real property or a portion thereof for a period of no less than twelve months, which is owned by an individual landlord.

“Eligible Landlord” an individual that owns and rents out and manages property, such as houses, apartments, or land, to tenants. Said landlord may own no more than five rental units that maintain responsibility for property maintenance, rent collection, and lease management in the commonwealth. Said landlord will be registered with and approved by EOHLC according to their regulations.

SECTION 2. Tenant Escrow Program Established

The Executive Office of Housing and Livable Communities (EOHLC) shall establish and administer a voluntary savings initiative known as the Tenant Escrow Program to assist rental tenants in building savings for the purchase of their first home. Under this program, eligible tenants with the agreement of an eligible landlord may elect to contribute ten percent of their monthly rent into a secure tenant escrow account managed by EOHLC.

SECTION 3. Use and Withdrawal of Funds

Funds in the tenant’s escrow account may only be withdrawn for use as a down payment or closing costs associated with the purchase of their first primary residence. The funds in the tenant escrow account may also be used as an emergency rent fund if the tenant cannot pay the full rental amount and the tenant has received a Notice to Quit or an eviction notice. Any amount taken out of the escrow account and used for an emergency rental payment will be subtracted from that month’s ten percent contribution to the tenant escrow account. 

SECTION 3. Tenant Contributions and State Match

Funds contributed by the tenant pursuant to Section 1 shall be matched by the commonwealth on a twenty percent basis of the final total amount in the escrow account, upon approval for the withdrawal of funds.

SECTION 4. Landlord Taxable Deductions

(a) A landlord whose tenant is contributing to a tenant’s escrow account may deduct an amount equal to one and one half times the amount of the tenants’ contribution from the amount of the annual taxable income derived from the contributing tenants’ lease established under section 2 of this act, payable by the landlord to the commonwealth. Municipalities within the commonwealth may elect to offer eligible landlords an additional deduction up to ten percent of the annual taxable income derived from the contributing tenants’ lease established under section 2 of this act.

(b) A landlord whose tenant contributes to a tenant escrow account pursuant to section 2 of this chapter may deduct an amount equal to one and one-half times the total amount of the tenant’s annual contribution from the landlord’s annual taxable income derived from the contributing tenant’s lease, for the purpose of determining income subject to taxation by the commonwealth.

(c) A city or town may, by a vote of its legislative body and with the approval of its chief executive officer, adopt a local option to provide an additional tax deduction to landlords participating in the Tenant Escrow Program. Such local option may authorize a deduction of up to ten percent of the landlord’s annual taxable income derived from the contributing tenant’s lease, provided that:

(i) the tenant is actively participating in the program; and

(ii) the landlord has complied with all reporting and verification requirements as determined by the municipality.

(d) The additional deduction authorized under subsection (b) shall apply only to local taxes or assessments, and shall not exceed ten percent of the landlord’s taxable income derived from the applicable lease in any tax year.

(e) Municipalities electing to implement this provision shall notify the department of revenue and the executive office of housing and livable communities of such adoption, and shall file an annual report detailing the number of participating landlords and the total value of deductions granted under this section.

SECTION 5. Tenant Escrow Fund

There shall be established a separate fund to be known as the Tenant’s Escrow Fund. The Fund shall be administered by EOHLC and shall receive and hold tenant contributions and state matching funds. The Fund shall not be subject to section 5C of Chapter 29 of the General Laws. The state matching funds shall be appropriated through the budget annually.

SECTION 6. Program Design and Regulations

EOHLC shall promulgate regulations to govern program eligibility, account administration, allowable uses, and compliance, including:

a)Safeguards to prevent landlords from raising rents to offset contributions.

b)Consumer protections to ensure account transparency and fund accessibility.

EOHLC shall submit any proposed regulations to the Joint Committee on Housing and the House and Senate committees on Ways and Means at least 30 days before their adoption by the department.