First-time homebuyers savings plan bill passes first two hurdles

The First-time Homebuyer savings accounts got two steps closer to reality in the last few days.

First, on January 29 VAR’s First-Time Homebuyers Savings Plan bill (HB331, introduced by Del. Tag Greason) unanimously passed the Agriculture, Commerce, Technology, and Natural Resources subcommittee.

Then on February 3, it passed the House Appropriations Committee — again, unanimously. Now it heads to the floor of the House for a full vote. If it passes there, the Senate will then act on it and hopefully it will be sent to Governor McAuliffe for his signature.

The bill would establish First-Time Homebuyer Savings Accounts allowing a contributor to deposit up to $50,000 principal into a banking or investment account, and have all the earnings on that account be free of state taxes. It could then be used for a down payment and closing costs on a first home.

The unanimous support the bill received on both the subcommittee and committee levels bodes well for its future — and for future Virginia homebuyers.

 

Below is the summary of The Virginia Housing Commission Bill for the First-time Homebuyer Session:

SUMMARY AS INTRODUCED:

First-time homebuyer savings plans. Establishes first-time home buyer savings accounts that are to be used for saving funds for the purchase of homes by first-time home buyers. Moneys in the account are required to be used solely for the down payment and closing costs for the purchase of a home by a first-time home buyer. The bill establishes an individual income tax subtraction for income earned on contributions to the account. However, if moneys are withdrawn from the account for purposes other than to pay eligible costs, any income previously subtracted would be subject to recapture by the Commonwealth and a five percent penalty would be imposed. There would be no recapture and addition to taxable income if the amounts withdrawn were (i) withdrawn because of the death or disability of the account beneficiary, (ii) a disbursement of assets pursuant to a filing for protection under federal bankruptcy laws, or (iii) transferred to another first-time home buyer savings account.

The bill limits the amount of principal that can be contributed to any account to $50,000 and limits the total amount that can be retained in an account at any time to $150,000. Persons would be allowed to contribute only cash or marketable securities to a first-time home buyer savings account.