I 

112TH CONGRESS 

1ST SESSION H. R. 3360 

To amend the Internal Revenue Code of 1986 to allow a deduction for 

contributions to tax-exempt Housing Equity Savings Accounts. 

IN THE HOUSE OF REPRESENTATIVES 

NOVEMBER 3, 2011 

Mr. RENACCI (for himself, Mr. CARNEY, Mr. MEEHAN, Mr. WEBSTER, Mr. 

QUIGLEY, and Mr. WELCH) introduced the following bill; which was referred to the Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to allow a 

deduction for contributions to tax-exempt Housing Equity Savings Accounts. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Creating Homeowner5 ship Opportunity Act of 2011’’. 

6 SEC. 2. HOUSING EQUITY SAVINGS ACCOUNTS. 

7 (a) IN GENERAL.—Part VII of subchapter B of chap8 ter 1 of the Internal Revenue Code of 1986 (relating to 

9 additional itemized deductions for individuals) is amended 


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1 by redesignating section 224 as section 225 and by insert2 ing after section 223 the following new section: 

3 ‘‘SEC. 224. HOUSING EQUITY SAVINGS ACCOUNTS. 

4 ‘‘(a) DEDUCTION ALLOWED.—In the case of an eligi5 ble individual, there shall be allowed as a deduction the 

6 aggregate amount paid in cash during the taxable year 

7 by or on behalf of such individual to a housing equity sav8 ings account of such individual. 

9 ‘‘(b) LIMITATION.—The amount allowable as a de10 duction under subsection (a) for any taxable year shall not 

11 exceed the lesser of— 

12 ‘‘(1) $10,000, or 

13 ‘‘(2) an amount equal to the compensation (as 

14 defined in section 219(f)(1)) includible in the indi15 vidual’s gross income for such taxable year. 

16 ‘‘(c) ELIGIBLE INDIVIDUAL.—For purposes of this 

17 section, the term ‘eligible individual’ means, with respect 

18 to any taxable year, any individual if such individual (and 

19 if married, such individual’s spouse) had no present own20 ership interest in a principal residence during the 3-year 

21 period ending at the close of the preceding taxable year. 

22 ‘‘(d) HOUSING EQUITY SAVINGS ACCOUNT.—For 

23 purposes of this section, the term ‘housing equity savings 

24 account’ means a trust created or organized in the United 

25 States exclusively for the benefit of an individual, but only 


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1 if the written governing instrument creating the trust 

2 meets the following requirements: 

3 ‘‘(1) Except in the case of rollover contributions 

4 from another housing equity savings account of such 

5 individual— 

6 ‘‘(A) no contribution will be accepted un7 less it is in cash, and 

8 ‘‘(B) contributions will not be accepted for 

9 the taxable year in excess of the dollar amount 

10 in effect for the taxable year under subsection 

11 (b)(1). 

12 ‘‘(2) The trustee is a bank (as defined in sec13 tion 408(n)) or such other person who demonstrates 

14 to the satisfaction of the Secretary that the manner 

15 in which such other person will administer the trust 

16 will be consistent with the requirements of this sec17 tion. 

18 ‘‘(3) No part of the trust funds will be invested 

19 in life insurance contracts. 

20 ‘‘(4) The interest of an individual in the bal21 ance in his account is nonforfeitable. 

22 ‘‘(5) The assets of the trust will not be commin23 gled with other property except in a common trust 

24 fund or common investment fund. 

25 ‘‘(e) TAX TREATMENT OF DISTRIBUTIONS.— 


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1 ‘‘(1) IN GENERAL.—Except as otherwise pro2 vided in this subsection, any amount distributed out 

3 of a housing equity savings account shall be included 

4 in gross income of the distributee for the taxable 

5 year in which the distribution is received. Notwith6 standing any other provision of this title (including 

7 chapters 11 and 12), the basis of any person in such 

8 an account is zero. 

9 ‘‘(2) EXCEPTION FOR AMOUNTS USED TO PUR10 CHASE PRINCIPAL RESIDENCE AND FOR CERTAIN

11 PAYMENTS TO INDIVIDUAL RETIREMENT AC12 COUNTS.— 

13 ‘‘(A) IN GENERAL.—Paragraph (1) shall 

14 not apply to any distribution during the taxable 

15 year which would (but for this paragraph) be 

16 includible in gross income for such year to the 

17 extent that the aggregate of such distributions 

18 during the taxable year do not exceed the ag19 gregate qualified payments made by the account 

20 beneficiary during such year. 

21 ‘‘(B) QUALIFIED PAYMENT.—For purposes 

22 of this paragraph, the term ‘qualified payment’ 

23 means— 

24 ‘‘(i) any payment of qualified acquisi25 tion costs (as defined in section 


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1 72(t)(8)(C)) incurred with respect to the 

2 principal residence of the account bene3 ficiary, and 

4 ‘‘(ii) any payment to an individual re5 tirement account but only if— 

6 ‘‘(I) the account beneficiary of 

7 the housing equity savings account 

8 from which the payment is made is 

9 also the beneficiary of the individual 

10 retirement account, and 

11 ‘‘(II) the payment is a qualified 

12 IRA payment. 

13 Any payment described in clause (ii) shall 

14 be treated for purposes of this title as a 

15 rollover contribution to the individual re16 tirement account. 

17 ‘‘(C) QUALIFIED IRA PAYMENT.—For pur18 poses of subparagraph (B), the term ‘qualified 

19 IRA payment’ means any payment if— 

20 ‘‘(i) the account beneficiary— 

21 ‘‘(I) is an eligible individual at 

22 the time of the payment, and 

23 ‘‘(II) attains age 55 as of the 

24 close of the taxable year during which 

25 the payment is made, 


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1 ‘‘(ii) the account beneficiary is— 

2 ‘‘(I) an eligible individual at the 

3 time of the payment, and 

4 ‘‘(II) has been an eligible indi5 vidual throughout the 20-year period 

6 ending on the date of the payment, or 

7 ‘‘(iii) the payment is made within 1 

8 year after the date of a payment described 

9 in subparagraph (B)(i). 

10 ‘‘(3) EXCEPTIONS FOR CERTAIN OTHER DIS11 TRIBUTIONS.—Rules similar to the rules of para12 graphs (3), (4), (5), and (6) of section 408(d) shall 

13 apply for purposes of this section. 

14 ‘‘(4) ADDITIONAL TAX ON AMOUNTS INCLUDED

15 IN GROSS INCOME.—If any distribution from a hous16 ing equity savings account is includible in gross in17 come of the account beneficiary, the tax liability of 

18 such beneficiary under this chapter for the taxable 

19 year in which the distribution is received shall be in20 creased by an amount equal to 20 percent of the 

21 amount of the distribution. 

22 ‘‘(f) TAX TREATMENT OF ACCOUNTS.— 

23 ‘‘(1) EXEMPTION FROM TAX.—A housing equity 

24 savings account is exempt from taxation under this 

25 subtitle unless such account has ceased to be a housVerDate Mar 15 2010 00:53 Nov 09, 2011 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H3360.IH H3360

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1 ing equity savings account by reason of paragraph 

2 (2). Notwithstanding the preceding sentence, any 

3 such account is subject to the taxes imposed by sec4 tion 511 (relating to imposition of tax on unrelated 

5 business income of charitable, etc. organizations). 

6 ‘‘(2) ACCOUNT TERMINATIONS.—Rules similar 

7 to the rules of paragraphs (2) and (4) of section 

8 408(e) shall apply to housing equity savings ac9 counts, and any amount treated as distributed under 

10 such rules shall be treated as not used to make pay11 ments described in subsection (e)(2). 

12 ‘‘(g) BENEFICIARY MUST BE UNDER AGE 55.—No 

13 deduction shall be allowed under this section with respect 

14 to any payment to a housing equity savings account for 

15 the benefit of an individual if such individual has attained 

16 age 55 before the close of such individual’s taxable year 

17 for which the contribution was made. 

18 ‘‘(h) OTHER DEFINITIONS AND SPECIAL RULES.— 

19 ‘‘(1) OTHER DEFINITIONS.—For purposes of 

20 this section— 

21 ‘‘(A) ACCOUNT BENEFICIARY.—The term 

22 ‘account beneficiary’ means the individual for 

23 whose benefit the housing equity savings ac24 count was established. 


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1 ‘‘(B) PRINCIPAL RESIDENCE.—The term 

2 ‘principal residence’ has the same meaning as 

3 when used in section 121, except that such 

4 term shall include only residences located in the 

5 United States. 

6 ‘‘(2) COST-OF-LIVING ADJUSTMENT.— 

7 ‘‘(A) IN GENERAL.—In the case of any 

8 taxable beginning in a calendar after 2012, the 

9 dollar amount in subsection (b)(1) shall be in10 creased by an amount equal to— 

11 ‘‘(i) such dollar amount, multiplied by 

12 ‘‘(ii) the cost-of-living adjustment de13 termined under section 1(f)(3) for the cal14 endar year in which such taxable year be15 gins determined by substituting ‘calendar 

16 year 2011’ for ‘calendar year 1992’ in sub17 paragraph (B) thereof. 

18 ‘‘(B) ROUNDING.—If any increase under 

19 subparagraph (A) is not a multiple of $50, such 

20 increase shall be rounded to the nearest mul21 tiple of $50. 

22 ‘‘(3) CERTAIN RULES TO APPLY.—Rules similar 

23 to the following rules shall apply for purposes of this 

24 section: 


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1 ‘‘(A) Section 219(d)(2) (relating to no de2 duction for rollovers). 

3 ‘‘(B) Section 219(f)(3) (relating to time 

4 when contributions deemed made). 

5 ‘‘(C) Section 219(f)(5) (relating to em6 ployer payments). 

7 ‘‘(D) Section 408(g) (relating to commu8 nity property laws). 

9 ‘‘(E) Section 408(h) (relating to custodial 

10 accounts). 

11 ‘‘(i) REPORTS.—The trustee of a housing equity sav12 ings account shall make such reports regarding such ac13 count to the Secretary and to the individual for whose ben14 efit the account is maintained with respect to contribu15 tions, distributions, and such other matters as the Sec16 retary may by regulation prescribe. The reports required 

17 by this subsection shall be filed at such time and in such 

18 manner, and furnished to such individuals at such time 

19 and in such manner, as may be required by such regula20 tions.’’. 

21 (b) DEDUCTION ALLOWED IN ARRIVING AT AD22 JUSTED GROSS INCOME.—Subsection (a) of section 62 of 

23 such Code is amended by inserting after paragraph (21) 

24 the following new paragraph: 


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1 ‘‘(22) HOUSING EQUITY SAVINGS ACCOUNT

2 CONTRIBUTIONS.—The deduction allowed by section 

3 224.’’. 

4 (c) TAX ON EXCESS CONTRIBUTIONS.— 

5 (1) Subsection (a) of section 4973 of such Code 

6 (relating to tax on excess contributions to individual 

7 retirement accounts, etc.) is amended by striking 

8 ‘‘or’’ at the end of paragraph (4), by inserting ‘‘or’’ 

9 at the end of paragraph (5), and by inserting after 

10 paragraph (5) the following new paragraph: 

11 ‘‘(6) a housing equity savings account (within 

12 the meaning of section 224(d)),’’. 

13 (2) Section 4973 of such Code is amended by 

14 adding at the end the following new subsection: 

15 ‘‘(h) EXCESS CONTRIBUTIONS TO HOUSING EQUITY

16 SAVINGS ACCOUNTS.—For purposes of this section, in the 

17 case of housing equity savings accounts (within the mean18 ing of section 224(d)), the term ‘excess contributions’ 

19 means the sum of— 

20 ‘‘(1) the excess (if any) of— 

21 ‘‘(A) the aggregate amount contributed for 

22 the taxable year to the accounts (other than 

23 rollover contributions), over 

24 ‘‘(B) the amount allowable as a deduction 

25 under section 224 for such contributions, and 


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1 ‘‘(2) the amount determined under this sub2 section for the preceding taxable year, reduced by 

3 the sum of— 

4 ‘‘(A) the distributions out of the accounts 

5 which were included in gross income under 

6 rules similar to the rules of section 408(d)(5) 

7 which apply to such accounts by reason of sec8 tion 224(e)(3), and 

9 ‘‘(B) the excess (if any) of— 

10 ‘‘(i) the maximum amount allowable 

11 as a deduction under section 224(b) for 

12 the taxable year, over 

13 ‘‘(ii) the amount contributed to the 

14 accounts for the taxable year. 

15 For purposes of this subsection, any contribution 

16 which is distributed out of the housing equity sav17 ings account in a distribution to which the rules 

18 similar to the rules of section 408(d)(4) which apply 

19 to such accounts by reason of section 224(e)(3) shall 

20 be treated as an amount not contributed.’’. 

21 (d) TAX ON PROHIBITED TRANSACTIONS.— 

22 (1) IN GENERAL.—Paragraph (1) of section 

23 4975(e) of such Code (relating to prohibited trans24 actions) is amended by striking ‘‘or’’ at the end of 

25 subparagraph (F), by redesignating subparagraph 


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1 (G) as subparagraph (H), and by inserting after 

2 subparagraph (F) the following new subparagraph: 

3 ‘‘(G) a housing equity savings account de4 scribed in section 224(d), or’’. 

5 (2) SPECIAL RULE.—Subsection (c) of section 

6 4975 of such Code is amended by adding at the end 

7 the following new paragraph: 

8 ‘‘(7) SPECIAL RULE FOR HOUSING EQUITY SAV9 INGS ACCOUNTS.—An individual for whose benefit a 

10 housing equity savings account is established shall 

11 be exempt from the tax imposed by this section with 

12 respect to any transaction concerning such account 

13 (which would otherwise be taxable under this sec14 tion) if section 224(f)(2) applies with respect to such 

15 transaction.’’. 

16 (e) FAILURE TO PROVIDE REPORTS ON HOUSING

17 EQUITY SAVINGS ACCOUNTS.—Paragraph (2) of section 

18 6693(a) of such Code (relating to failure to provide re19 ports on individual retirement accounts or annuities) is 

20 amended by striking ‘‘and’’ at the end of subparagraph 

21 (D), by striking the period at the end of subparagraph 

22 (E) and inserting ‘‘, and’’, and by adding at the end the 

23 following new subparagraph: 

24 ‘‘(F) Section 224(i) (relating to housing 

25 equity savings accounts).’’. 


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1 (f) CLERICAL AMENDMENT.—The table of sections 

2 for part VII of subchapter B of chapter 1 of such Code 

3 is amended by striking the item relating to section 224 

4 and inserting the following new items: 

‘‘Sec. 224. Housing equity savings accounts. 

‘‘Sec. 225. Cross references.’’. 

5 (g) EFFECTIVE DATE.—The amendments made by 

6 this section shall apply to contributions for taxable years 

7 beginning after December 31, 2011. 

Æ 


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