AB 731 (Chen). Personal income taxes: deductions: homeowners' association assessments.

Would allow a personal income tax deduction of up to $5,000 per year for regular assessments.

Current Status: Dead

FindHOALaw Quick Summary:

The Personal Income Tax Law allows various deductions in computing taxable income. This bill would amend Sections 17072 and 17208 of the Tax Code to allow a deduction, not to exceed $5,000, for qualified homeowners’ association assessments for taxable years beginning on or after January 1, 2017. Qualified assessments must be regularly occurring, mandatory, and directly benefit the taxpayer’s principal residence. Qualified assessments do not include special assessments.

This bill would take effect immediately as a tax levy.

**UPDATE: On March 27, 2017, the proposed text of AB 731 was amended to reduce the tax deduction from $5,000 to $3,000, add a qualification for taxpayers whose gross income does not exceed $150,000, and add a sunset clause of December 1, 2023:

17208.

(a) For taxable years beginning on or after January 1, 2017, and before January 1, 2023, a deduction shall be allowed for an amount paid or incurred by the qualified taxpayer during the taxable year, not to exceed five thousand dollars ($5,000), three thousand dollars ($3,000), for qualified homeowners’ association assessments.

(c) For purposes of this section, “qualified taxpayer” means a taxpayer whose gross income for the taxable year does not exceed one hundred fifty thousand dollars ($150,000).

(d) This section shall remain in effect only until December 1, 2023, and as of that date is repealed.

**UPDATE: On May 1, 2017, the proposed text of AB 731 was amended to reduce the tax deduction from $3,000 to $1,500 and further defines a “qualified taxpayer”:

(a) For taxable years beginning on or after January 1, 2017, and before January 1, 2023, 2022, a deduction shall be allowed for an amount paid or incurred by the qualified taxpayer during the taxable year, not to exceed three thousand dollars ($3,000), one thousand five hundred dollars ($1,500), for qualified homeowners’ association assessments.

(c) For purposes of this section, “qualified taxpayer” means a taxpayer whose gross income for the taxable year does not exceed one the following amounts:

(1) One hundred fifty thousand dollars ($150,000). ($150,000) for qualified taxpayers filing a joint, head of household, or surviving spouse as defined in Section 17046, return.

(2) One hundred thousand dollars ($100,000) for a qualified taxpayer filing a return other than as described in paragraph (1).

To read the current text of AB 731, click here to the view the bill’s page on the California Legislature’s website. FindHOALaw will continue to track AB 731 as it progresses through the Legislature.