Amendment ID: S3018-378
Amendment 378
Stemming the Housing Crisis
Mr. Cyr and Ms. Moran move that the proposed new text be amended by inserting, at the end thereof, the following new sections:-
SECTION XX. Chapter 23B is hereby amended by adding the following section:-
Section 31. (a) For purposes of this section:
“Affordable rental housing” means housing that serves persons with a household income of less than 120 per cent of median income for a municipality; and
“Qualified developer” means a developer that has partnered with a school district or municipality to create affordable rental housing for school district or municipal employees.
(b)The department, or any division within the department, may enter into long-term financing agreements with school districts, municipalities and qualified developers for the creation of affordable rental housing for municipal employees.
(c) Payment on a finance agreement under this section shall be deferred until the affordable rental housing that is financed is put into service and the school district or municipality begins collecting rent from the occupants of that affordable rental housing.
SECTION XX. Section 6 of chapter 44B is hereby amended by inserting after the word “purpose”, in line 24, the following words:- “; provided, however, that funds for open space or historic preservation that have not been expended for not less than three consecutive fiscal years may be transferred by the chief executive authority of the municipality for community housing, wastewater infrastructure or water infrastructure by a majority vote of the legislative body”.
SECTION XX. Section 1A of chapter 40, as appearing in the 2016 Official Edition, is hereby amended by adding the following definition:-
“Tiny house”, a detached structure containing a dwelling unit with no more than 600 square feet, excluding the area of any floor level located above the main floor, intended for year-round occupancy that meets the requirements of chapter 143, and may include single-room structures, and which is built on either a permanent foundation or on a chassis that is suitable for registration for transport on public highways of the state.
SECTION XX. Chapter 40, as appearing in the 2016 Official Edition, is hereby amended by inserting, after section 60B, the following section:-
60C. A city or town, by vote of its town meeting, town council or city council, with the approval of the mayor where required by law, on its own behalf or in conjunction with one or more cities or towns, may exempt from property taxation, under chapter 59, a dwelling unit that is rented on a yearly basis, and occupied year-round, for an amount not to exceed 150 per cent the fair market rent established by the United States Department of Housing and Urban Development for the metropolitan statistical area. The owner of a dwelling qualifying for exemption under this section shall submit to the municipality or its agent documentation, including but not limited to a signed lease, necessary to confirm the eligibility of the rental.
The amount of the exemption shall be determined by the municipality, but shall not exceed an amount equal to the tax otherwise owed on the property based on the assessed value of the property, including accessory dwelling units, multiplied by the square feet of the living space of all dwelling units on the property that qualify under this section, divided by the total square feet of structures on the property. This section shall take effect on January 1, 2023.
SECTION XX. Section 3 of chapter 40A, as appearing in the 2016 Official Edition, is hereby amended by adding the following paragraph:-
“A municipality that permits accessory dwelling units pursuant to this section shall permit a tiny house as a detached accessory dwelling unit; provided, however, that such land or structures may be subject to reasonable regulations concerning dimensional setbacks, screening and the bulk and height of structures; provided, however, that a tiny house used for habitation shall be connected to a public water system or a private well, and to a public sewer system or a subsurface wastewater disposal system that has been approved by the Massachusetts department of environmental protection. A zoning ordinance or by-law may require that the principal dwelling or the accessory dwelling unit be continuously owner-occupied and may limit the total number of accessory dwelling units in the municipality to not less than 5 per cent of the total non-seasonal single-family housing units in the municipality. No zoning ordinance or by-law shall prohibit or require a special permit for the use of land or structures for an accessory dwelling unit, or the rental thereof, in a single-family residential zoning district on a lot with 5,000 square feet or more or on a lot of sufficient area to meet the requirements of title 5 of the state environmental code established by section 13 of chapter 21A.”
SECTION XX. Chapter 59 of the General Laws is hereby amended by inserting after section 5N the following section:-
Section 5P. In any city or town that accepts this section, the board of selectmen of a town, or in a municipality having a town council form of government, the town council, or in a city, the mayor, with the approval of the city council, may establish a property tax exemption for residential real estate in the city or town that is affordable for, and rented and occupied by, persons whose household income is not more than the 120 per cent area median income. The exemption shall be for an amount determined by each city or town; provided, however, that the amount shall not be more than the tax otherwise due on the parcel based on the full and fair assessed value, multiplied by the square footage of the housing units rented to and occupied by a persons whose household income is not more than the area median income, divided by the total square footage of a structure located on the parcel. For rental housing, assessment of such property, if by an income approach to value, shall assume fair market rent for all units. To be eligible for the exemption, the housing unit shall be leased to persons whose household income is not more than 120 per cent of area median income at rents for the entire fiscal year for which the exemption is sought. The owner of the residential real estate shall submit to the city or town documentation including, but not limited to, a signed lease and any other documentation necessary to confirm the eligibility of the residential real estate.
A municipality shall have the power to create local rules and procedures for implementing this section in a way that is consistent with the intent of this section. This section shall take effect on January 1, 2023.
SECTION XX. Chapter 60 of the General Laws is hereby amended by inserting, after section 37B, the following section:-
Section 37C. A property subject to sale under section 37 of this chapter that contains three (3) or less units, the department of housing and community development, shall have a right of first refusal to acquire the tax lien at tax sale, and may assist the owner to discharge the lien or take title and acquire the property in its own name pursuant to regulations to be developed by the corporation, consistent with its purposes. The corporation shall notify the collector of its intention to exercise this right no later than 10 days before the date of sale or any adjournment of the sale. Failure of the corporation to notify the collector as provided herein shall extinguish the right of first refusal under this section. This section shall take effect on January 1, 2023.
SECTION XX. Chapter 62 of the General Laws is hereby amended by inserting after section 5C the following new section:-
Section 5D. Definitions applicable to this section and section 5E.
The following words and phrases for the purposes of this sections and the following section shall have the following meanings:
“Account holder” means an individual who establishes, individually or jointly with one or more other individuals, a first-time homebuyer savings account.
“Allowable closing costs” means a disbursement listed on a settlement statement for the purchase of a single-family residence in Massachusetts by a qualified beneficiary.
“Eligible costs” means the down payment and allowable closing costs for the purchase of a single-family residence in Massachusetts by a qualified beneficiary.
“Financial institution” means any bank, trust company, savings institution, industrial loan association, consumer finance company, credit union, or any benefit association, insurance company, safe deposit company, money market mutual fund, or similar entity authorized to do business in Massachusetts.
“First-Time Homebuyer” means an individual who resides in Massachusetts and has not owned or purchased, either individually or jointly, a single-family residence during a period of three (3) years prior to the date of the purchase of a single-family residence.
“First-Time Home Buyer Savings Account” or “account” means an account with a financial institution that an account holder designates as a first-time home buyer savings account on the account holder’s Massachusetts income tax return for tax year 2022 or any tax year thereafter, pursuant to this Chapter for the purpose of paying or reimbursing eligible costs for the purchase of a single-family residence in Massachusetts by a qualified beneficiary.
“Qualified Beneficiary” means a first-time home buyer who is designated as the qualified beneficiary of an account designated by the account holder as a first-time home buyer savings account.
“Settlement Statement” means the statement of receipts and disbursements for a transaction related to real estate, including a statement prescribed under the Real Estate Settlement Procedures Act of 1974, 12 U.S.C. 2601 et seq., as amended, and regulations thereunder.
“Single-Family Residence” means a single-family residence owned and occupied by a qualified beneficiary as the qualified beneficiary’s principal residence, which may include a manufactured home, trailer, mobile home, condominium unit, or cooperative.
Section 5E. Designation and Use of First-Time Home Buyer Savings Account.
(a) Beginning January 1, 2022, any individual may open an account with a financial institution and designate the account, in its entirety, as a first-time home buyer savings account to be used to pay or reimburse a qualified beneficiary’s eligible costs for the purchase of a single-family residence in Massachusetts.
(b) An account holder must designate no later than April 15 of the year following the tax year during which the account is established, a first-time home buyer as the qualified beneficiary of the first-time home buyer savings account. The account holder may designate himself or herself as the qualified beneficiary and may change the designated qualified beneficiary at any time, but there may not be more than one qualified beneficiary at any one time.
(c) An individual may jointly own a first-time home buyer savings account with another person if the joint account holders file a joint income tax return.
(d) An individual may be the account holder of more than one first-time home buyer savings account. However, an account holder cannot have multiple accounts that designate the same qualified beneficiary.
(e) An individual may be designated as the qualified beneficiary on more than one first-time home buyer savings account.
(f) Only cash and marketable securities may be contributed to a first-time home buyer savings account. Subject to the limitations of this section, persons other than the account holder may contribute funds to a first-time home buyer savings account. There is no limitation on the amount of contributions that may be made to or retained in a first-time home buyer savings account.
(g) The funds held in a first-time home buyer savings account shall not be used to pay expenses of administering the account, except that a service fee may be deducted from the account by a financial institution in which the account is held;
(h) The account holder shall submit the following to the department of revenue:
(1) detailed information regarding the first-time home buyer savings account, including a list of transactions for the account during the tax year and the Form 1099 issued by the financial institution for such account with the account holder’s Massachusetts income tax return on forms prepared by the department of revenue; and
(2) a detailed account of the eligible costs toward which the account funds were applied, if there was a withdrawal from the account, and a statement of the amount of funds remaining in the account, if any.
(i)Under this section and section 5D of this chapter, a financial institution shall not be required to:
(1) Designate an account as a first-time home buyer savings account, or designate the qualified beneficiaries of an account, in the financial institution’s account contracts or systems or in any other way;
(2) Track the use of funds withdrawn from a first-time home buyer savings account;
(3) Allocate funds in a first-time home buyer savings account among joint account holders or multiple qualified beneficiaries; or
(4) Report any information to the Department of Revenue or any other governmental agency that is not otherwise required by law.
(j)A financial institution is not responsible or liable for:
(1) Determining or ensuring that an account satisfies the requirements to be a first-time home buyer savings account;
(2) Determining or ensuring that funds in a first-time home buyer savings account are used for eligible costs; or
(3) Reporting or remitting taxes or penalties related to the use of a first-time home buyer savings account.
(k) Except as otherwise provided in this section and subject to the limitations under this subsection, there shall be deducted from taxable income of an account holder, for Massachusetts income tax purposes:
(1) the amount contributed to a first-time home buyer savings account during each tax year, not to exceed $5,000 for an account holder who files an individual tax return or $10,000 for joint account holders who file a joint tax return.
(2) the amount of earnings, including interest and other income on the principal, from the first-time home buyer savings account during the tax year.
(l) An account holder may claim the deduction and exclusion under subsection (k):
(1) For a period not to exceed 15 years;
(2) For an aggregate total amount of principal and earnings, not to exceed $50,000 during that 15-year period; and
(3) Only if the principal and earnings of the account remain in the account until a withdrawal is made for eligible costs related to the purchase of a single-family residence by a qualified beneficiary, except as otherwise provided in this section.
(m) Any funds in a first-time home buyer savings account not expended on eligible costs by December 31 of the last year of the 15-year period under Subsection 7(2)(a) of this Chapter shall thereafter be included in the account holder’s taxable income.
(n) A person other than the account holder who deposits funds in a first-time home buyer savings account shall not be entitled to the deduction and exclusion provided for under this Chapter.
(o) The deduction and exclusion from taxable income provided for by this Section shall apply to any alternative bases for calculating taxable income for Massachusetts income tax purposes.
(p) Except as otherwise authorized in this of this section, if the account holder withdraws any funds from a first-time home buyer savings account for a purpose other than eligible costs for the purchase of a single-family residence:
(1) Those funds shall be included in the account holder’s taxable income; and
(2) The account holder shall pay a penalty to the Department of Revenue equal to the tax that would have been collected had the withdrawn funds been subject to income tax. Such penalty shall not apply to funds withdrawn from an account that were:
(i) Withdrawn by reason of the account holder’s death or disability;
(ii) A disbursement of assets of the account pursuant to a filing for protection under the United States Bankruptcy Code, 11 U.S.C. § 101 et seq.; or
(iii) A transfer of the funds from a first-time home buyer savings account to a new first-time home buyer savings account held by a different financial institution or the same financial institution.
(q) The Department of Revenue shall prepare forms for:
(1) The designation of an account with a financial institution to serve as a first-time home buyer savings account;
(2) The designation of a qualified beneficiary of a first-time home buyer savings account; and
(3) For an account holder to annually submit to the Department of Revenue detailed information regarding the first-time home buyer savings account, including but not limited to a list of transactions for the account during the tax year, and identifying any supporting documentation that is required to be maintained by the account holder.
(r) This section shall take effect on January 1, 2023.