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119-hr-7756119th CongressWALLET

First-time Homebuyer Savings Account Act of 2026

Sponsored By: Representative Barrett, Tom [R-MI-7]

Introduced

Summary

This bill would create a tax-advantaged Homeowner Savings Account to help first-time buyers save for a primary residence. It would let eligible people deduct cash contributions and take tax-free withdrawals for buying, building, or qualifying improvements while imposing tight limits to keep funds dedicated to housing.

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  • People who did not own a principal residence in the prior three years would be eligible. They would be able to deduct cash contributions and withdraw tax-free for purchase, construction, or qualifying improvements.
  • Annual contributions would be limited by the lesser of the Section 219(b)(5) baseline amount, the taxpayer's earned income, or an amount that keeps the account balance below 20% of the national average single-family home price. Nonqualified distributions would be includible in income and subject to a 10% penalty unless an exempted reason applies, such as job loss or major health expenses.
  • Accounts would be trusts organized in the United States and held by banks, insurance companies, or approved custodians. The bill would add these accounts to excess-contribution rules under Section 4973 and allow rollovers within 60 days under specified conditions.

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Bill Overview

Analyzed Economic Effects

4 provisions identified: 2 benefits, 0 costs, 2 mixed.

Tax deduction for account contributions

This bill would let an eligible individual deduct cash contributions to a Homeowner Savings Account on their tax return for the year. The deduction would be limited by the yearly legal contribution limit and contributions must be cash (except rollovers). You would have to meet the three‑year no‑ownership test to qualify as an eligible individual.

New homeowner savings account rules

This bill would create a new Homeowner Savings Account held as a U.S. trust or qualifying custodial account. Except for rollovers, only cash contributions would be allowed. Trustees would need to be a bank, an insurance company, or another Secretary-approved person, and account assets could not be put into life insurance contracts. To open an account you would need to be a first-time homebuyer under the bill's test — no present ownership interest in a main home during the prior three years.

Annual price cap and contribution limits

This bill would cap yearly contributions so the account balance cannot exceed 20% of the Secretary's published national average single‑family home price for the year. Your annual contribution would also be limited to the law's set baseline amount for the year and to your taxable compensation, whichever is smallest. The baseline cap would be reduced (not below zero) for taxpayers with adjusted gross income above an applicable dollar amount by a formula that uses $10,000 or $20,000 in the denominator depending on filing status. The Treasury Secretary would publish the national average single‑family home price by December 31 each year for the following year.

Tax rules for withdrawals and penalties

This bill would make withdrawals used only for qualified homeowner expenses tax‑free. To exclude money used to buy or build a home, you would need to meet the three‑year no‑ownership test. Amounts not used for qualified expenses (and not exempt or rolled over) would be taxable and subject to a 10% additional tax. Certain emergency or life‑event distributions (examples: job loss, major medical costs, marriage that gives ownership, death, living abroad) would be exempt from the tax. You would be able to roll an account distribution into another Homeowner Savings Account if redeposited within 60 days and you did not do another non‑includible rollover in the prior year. Excess contributions could be corrected by withdrawing them by your tax return due date (including extensions) with the earnings, and those earnings would be taxable. The accounts would also be subject to the existing section 4973 excess‑contribution rules.

Sponsors & CoSponsors

Sponsor

Barrett, Tom [R-MI-7]

MI • R

Cosponsors

There are no cosponsors for this bill.

Roll Call Votes

No roll call votes available for this bill.

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