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Committee advances catastrophic savings-account tax deduction for homeowners
Summary
HB511 would allow homeowners to designate catastrophic savings accounts and reduce taxable income for amounts set aside; the committee noted limits tied to insurance deductibles and higher uncapped amounts for uninsured owners.
The committee advanced HB511, a model-based bill from the National Council of Insurance Legislators that allows homeowners to designate funds in a catastrophic savings account (CSA) and reduce taxable income by specified amounts when an account is used to cover disaster-related losses.
Representative Lumsden, the sponsor, said the CSA can be a savings or money-market account and applies only to individuals who own their primary residence. The deduction varies based on insurance deductible: owners with deductibles of $1,000 or less may reduce taxable income by up to $2,000; owners with higher deductibles may reduce by the lesser of twice the deductible or $25,000. Uninsured homeowners may reduce taxable income by up to $250,000 but not in excess of the property's fair market value.
Committee members asked whether unused funds would remain taxable when the property is sold; the sponsor said the unused amounts would simply be treated as taxable income at that time. Chairman Blackman and others said they anticipated technical edits before full committee.
The subcommittee moved and full committee approved the measure by voice vote; the sponsor and vice chair noted they expect to tighten language before final passage.
