Bill Summary
The "First-Time Homebuyer Savings Act of 2026" aims to create a tax-advantaged savings account specifically for first-time homebuyers in the United States. Under this legislation, eligible individuals can establish a "first-time homebuyer savings account" to save for purchasing or constructing their first home, with contributions being tax-deductible up to $10,000 annually.
Key features of the legislation include:
1. **Eligibility**: Individuals who, along with their spouse, have not owned a residential property in the last three years qualify for the account.
2. **Tax Benefits**: Contributions made to the account are tax-deductible, and distributions used for qualified homebuyer expenses (such as purchase costs, construction expenses, and related transaction fees) are not subject to income tax.
3. **Contribution Limits**: A maximum of $10,000 can be contributed to the account each year, with the provision that taxpayers with higher adjusted gross incomes (over $200,000) will not receive deduction benefits.
4. **Account Management**: The accounts must be managed by qualified trustees (like banks or insurance companies) and have specific investment and operational requirements to ensure they are used solely for homebuyer expenses.
5. **Excess Contributions**: If contributions exceed limits, specific tax penalties apply, but individuals can withdraw excess contributions before the tax return due date without incurring penalties.
6. **Rollover Option**: After acquiring a home, individuals can transfer funds from their savings account to an individual retirement account under certain conditions.
The act is designed to encourage savings for first-time home purchases, making homeownership more accessible. The provisions will become effective for taxable years starting after the enactment of the legislation.
Possible Impacts
The "First-Time Homebuyer Savings Act of 2026" could affect people in several ways:
1. **Increased Affordability for First-Time Homebuyers**: By allowing eligible individuals to deduct contributions to a first-time homebuyer savings account from their taxable income, this legislation would make it easier for first-time buyers to save for a down payment and other associated costs of purchasing a home. This could lead to increased homeownership rates among young adults and families who might otherwise struggle to save enough money.
2. **Tax Benefits and Incentives**: The establishment of these accounts provides a specific tax incentive for individuals who have not owned a home in the past three years. By allowing tax-free growth of funds used for qualified homebuyer expenses, individuals can potentially accumulate more savings over time without the burden of taxes on interest earned. This could encourage more people to save specifically for home purchases, promoting financial planning and stability.
3. **Regulatory Compliance and Financial Education**: The creation of first-time homebuyer savings accounts may necessitate that banks and financial institutions develop new products and educational resources to help clients navigate these accounts. This could improve overall financial literacy related to home buying and saving strategies, helping individuals make informed decisions about their finances and home purchasing process. Additionally, the requirement for proper administration of these accounts could enhance consumer protection and transparency in financial transactions related to home buying.
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 8221 Introduced in House (IH)]
<DOC>
119th CONGRESS
2d Session
H. R. 8221
To amend the Internal Revenue Code of 1986 to establish first-time
homebuyer savings accounts.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
April 9, 2026
Ms. Mace 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 establish first-time
homebuyer savings accounts.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``First-Time Homebuyer Savings Act of
2026''.
SEC. 2. FIRST-TIME HOMEBUYER SAVINGS ACCOUNT.
(a) In General.--Part VII of subchapter B of chapter 1 of subtitle
A of the Internal Revenue Code of 1986 is amended by inserting after
section 225 the following new section:
``SEC. 225A. FIRST-TIME HOMEBUYER SAVINGS ACCOUNT.
``(a) Deduction Allowed.--In the case of an eligible individual,
there shall be allowed as a deduction for the taxable year an amount
equal to the aggregate amount paid in cash during such taxable year by
or on behalf of such individual to a first-time homebuyer savings
account of such individual.
``(b) Definitions.--For purposes of this section--
``(1) First-time homebuyer savings account.--The term
`first-time homebuyer savings account' means a trust created or
organized in the United States as a first-time homebuyer
savings account exclusively for the purpose of paying qualified
homebuyer expenses of the account beneficiary, but only if the
written governing instrument creating the trust meets the
following requirements:
``(A) No contribution will be accepted--
``(i) unless it is in cash, or
``(ii) if such contribution would result in
aggregate contributions to such account in
excess of the contribution limit specified in
subsection (c).
``(B) The trustee is a bank (as defined in section
408(n)), an insurance company (as defined in section
816), or another person who demonstrates to the
satisfaction of the Secretary that the manner in which
such person will administer the trust will be
consistent with the requirements of this section.
``(C) No part of the trust assets will be invested
in life insurance contracts.
``(D) The assets of the trust will not be
commingled with other property except in a common trust
fund or common investment fund.
``(E) The interest of an individual in the balance
in his account is nonforfeitable.
``(2) Eligible individual.--The term `eligible individual'
means an individual if such individual (and, if married, such
individual's spouse) had no present ownership interest in a
residential property during the 3-year period ending on the
present date.
``(3) Qualified homebuyer expenses.--For purposes of this
section, the term `qualified homebuyer expenses' means amounts
paid or incurred by the account beneficiary--
``(A) in the case of an eligible individual, to
purchase a principal residence, including any
transaction costs relating to such purchase,
``(B) in the case of an eligible individual, to
construct a principal residence, including purchasing
land, site preparation, design costs, permitting costs,
and other expenses incurred to carry out such
construction, and
``(C) for any expense relating to a principal
residence of the account beneficiary acquired or
constructed when such account beneficiary was an
eligible individual during the 3-year period beginning
on the date--
``(i) of the acquisition of such principal
residence, or
``(ii) in the case of a principal residence
constructed by the taxpayer, the date on which
such construction was completed.
``(4) Account beneficiary.--The term `account beneficiary'
means the individual on whose behalf the first-time homebuyer
savings account was established.
``(5) Principal residence.--The term `principle residence'
has the same meaning as when used in section 121.
``(6) Publication of national average single family home
price.--The Secretary of the Treasury shall, not later than
December 31 of each calendar year, publish the estimated
national average price of a single family home for the
following calendar year.
``(7) Rollover contribution.--The term `rollover
contribution' means an amount paid or distributed from a first-
time homebuyer savings account to the account beneficiary to
the extent that--
``(A) the amount received is paid into a first-time
homebuyer savings account for the benefit of such
beneficiary not later than the 60th day after the day
on which the beneficiary receives the payment or
distribution, and
``(B) such account beneficiary did not receive any
other amount described in subparagraph (A) from a
first-time homebuyer savings account which was not
includible in the individual's gross income because of
subsection (d)(2)(B) during the 1-year period ending on
the date of such receipt.
``(c) Contribution Limit.--The aggregate amount of contributions
for any calendar year to all first-time homebuyer savings accounts
maintained for the benefit of an individual shall not exceed $10,000.
``(d) Limitation on Modified Adjusted Gross Income.--In the case of
a taxpayer whose adjusted gross income for the taxable year exceeds
$200,000 (twice such amount in the case of a joint return), no
deduction shall be allowed under subsection (a) for such taxable year.
``(e) Treatment of Distributions.--
``(1) Amounts used for qualified homebuyer expenses.--Any
amount paid or distributed out of a first-time homebuyer
savings account which is used exclusively to pay qualified
homebuyer expenses shall not be includible in gross income.
``(2) Inclusion of amounts not used for qualified homebuyer
expenses.--Any amount paid or distributed out of a first-time
homebuyer savings account which is not--
``(A) used exclusively to pay the qualified
homebuyer expenses of the account beneficiary,
``(B) a rollover contribution, or
``(C) a transfer made under subsection (g),
shall be included in the gross income of such beneficiary and
the amount of any tax imposed by this chapter shall be
increased by 10 percent on any amount so includible.
``(3) Excess contributions returns before due date of
return.--
``(A) In general.--If any excess contribution is
contributed for a taxable year to any first-time
homebuyer savings account of an individual, paragraph
(2) shall not apply to distributions from the first-
time homebuyer savings accounts of such individual (to
the extent such distributions do not exceed the
aggregate excess contributions to all such accounts of
such individual for such year) if--
``(i) such distribution is received by the
individual on or before the last day prescribed
by law (including extensions of time) for
filing such individual's return for such
taxable year, and
``(ii) such distribution is accompanied by
the amount of net income attributable to such
excess contribution.
Any net income described in clause (ii) shall be
included in the gross income of the individual for the
taxable year in which it is received.
``(B) Excess contribution defined.--For purposes of
subparagraph (A), the term `excess contribution' means
any contribution (other than a rollover contribution)
which is not excludable from gross income under this
section.
``(f) Tax Treatment of Account.--A first-time homebuyer savings
account is exempt from taxation under this subtitle unless such account
has ceased to be a first-time homebuyer savings account.
Notwithstanding the preceding sentence, any such account is subject to
the taxes imposed by section 511 (relating to imposition of tax on
unrelated business income of charitable, etc. organizations).
``(g) Treatment of Account After Acquisition of Residential
Property.--
``(1) In general.--In the case of an account beneficiary
who acquires (or whose spouse acquires) a present ownership
interest in a residential property such individual may transfer
amounts in the first-time homebuyer savings account of such
individual or such individual's spouse to an individual
retirement account (as defined in section 408(a)) of such
individual or such individual's spouse during the 180 day
period beginning on the date on which the 3-year period
described in subsection (b)(3)(C) ends with respect to such
acquisition.
``(2) Termination.--A first-time homebuyer savings account
shall cease to be a first-time homebuyer savings account on the
first day after the 180 day period described in paragraph (1)
and amounts in such account shall be treated as distributed to
the account beneficiary.''.
(b) Payment to First-Time Homebuyer Savings Account Not Treated as
Wages.--Section 3121(a) of such Code is amended--
(1) in paragraph (22)(B), by striking ``; or'' and
inserting a comma,
(2) in paragraph (23), by striking ``section section
139B(a).'' and inserting ``section 139B(a), or'', and
(3) by inserting after paragraph (23) the following new
paragraph:
``(24) any amount which is excludible from gross income of
the employee under section 225A(a).''.
(c) Tax on Excess Contributions.--
(1) In general.--Section 4973(a) of such Code is amended--
(A) in paragraph (5), by striking ``or'',
(B) in paragraph (6), by inserting ``or'' after the
comma, and
(C) by inserting after paragraph (6) the following
new paragraph:
``(7) a first-time homebuyer savings account (within the
meaning of section 225A(b)(1)),''.
(2) Definition of excess contribution in 4973.--Section
4973 of such Code is amended by adding at the end the following
new subsection:
``(i) Excess Contributions to First-Time Homebuyer Savings
Account.--For purposes of this section, in the case of a first-time
homebuyer savings account (within the meaning of section 225A(b)(1)),
the term `excess contribution' means the amount by which the amount
contributed for the taxable year to such account exceeds the
contribution limit under 225A(c)(1).''.
(d) Clerical Amendment.--The table of sections for part VII of
subchapter B of chapter 1 of subtitle A of such Code is amended by
inserting after the item relating to section 225 the following new
item:
``Sec. 225A. First-time homebuyer savings account.''.
(e) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this Act.
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