The music metaphor of the week takes me back to my high school swim team days. For Saturday practice only, our coach would let us bring in a record album of our choosing, which he would play over the public address system while we swam laps. The only catch, and it was a big one, was that if he didn’t like the music, the album would be dropped into the pool and its owner would have to retrieve the soggy vinyl from the deep end. I’ll never forget when the Cars first album was released in 1978 and “All Mixed Up” was blaring over the PA system. Shortly thereafter, one of my teammates was descending to retrieve his record.
So, I couldn’t help being all mixed up on the enactment of New York State’s brand new home savings incentive. You see, apparently the legislation was signed, sealed, and delivered in December of 2017, only to be postponed by another piece of legislation earlier this month requiring that “The Division of Housing and Community Renewal shall issue a report with detailed recommendations and findings to the governor . . .”
The program, when and if it becomes effective, is something akin to the 529 college savings programs. First time home buyers would be able to deduct up to $5,000 a year ($10,000 for couples) from their New York State taxable income for contributions made to the plan. As with 529 plans, the earnings made from account investments would also be free from the New York tax. The cap on lifetime contributions to the account would be fixed at $100,000.
Why the delay? Well no one can be sure, but one of the major concerns appears to be establishing income limits for using the plan. A spokesperson for Governor Cuomo was quoted as referring to a well-known high income couple and how the law was never intended for them to qualify. So, when will the program begin? Uncertainty still remains and we might just have to wait till we drain the pool or dive to the bottom to recover our confusion.
If my blog has raised questions about this incentive, contact me at WBerkowitz@berdonllp.com or your Berdon advisor.
Wayne Berkowitz, a tax partner and head of the State and Local Tax Group at Berdon LLP, New York Accountants, advises on the unique requirements of governments and municipalities across the nation.