Legislation was introduced in Congress last week that would create 529-style savings accounts for first-time homebuyers.
The First-Time Home Buyer Savings Account Act (H.R 2802) – sponsored by Reps. Barbara Comstock (R-VA), Mike Coffman (R-CO) and Sean Patrick Maloney (D-NY) – would take the highly successful 529 plan model, which provides parents a tax-advantaged means to save for their children’s college education, and apply it to buying a first home.
The bill would allow individuals to deposit up to $14,000 per year and married couples filing jointly up to double that amount, after taxes, into a first-time homebuyer account with a maximum lifetime investment of $50,000. The investment can grow up to $150,000 tax-free and there is no time limit on how long the funds may remain in the account. The account is only available for use to make the down payment and pay the other fees and costs associated with the purchase of a first home.
“Buying a home is one of the best ways to lift people into the middle class and keep them there, which is why this bipartisan legislation is so important – it gives first time home buyers the tools they need to save and buy their first house,” Comstock said.
Maloney said the challenge of buying a home is difficult, particularly for those getting out of college with student loans to pay off.
“With higher rents, student loan debt and a changing economy it is harder than ever for folks in the Hudson Valley – especially young people – to save for their first home,” Maloney said. “Buying a home is one of the best ways to lift people into the middle class and keep them there, which is why this bipartisan legislation is so important – it gives first time home buyers the tools they need to save and buy their first house.”
Coffman called the bill a bipartisan solution to this problem.
“If we can help millennials attain homeownership, this would not only be a wise financial move for them, but would have broader positive financial impact for our economy as a whole,” Coffman added.