Bill > HR6542

This bill establishes a new type of tax-advantaged savings account called a Down Payment Savings Account (DPSA) to help first-time homebuyers save money for purchasing their first home. Individuals aged 18 and older can contribute up to $10,000 annually ($20,000 for joint returns) to these accounts, with contributions limited to cash and only from the account beneficiary. Contributions are tax-deductible, but are subject to income phaseouts for individuals with modified adjusted gross income above $150,000 ($236,000 for joint returns). The funds must be used exclusively for down payment or closing costs when purchasing a first home, and can only be used by individuals who have not owned a principal residence in the previous three years. If the funds are not used for qualified home purchase expenses, withdrawals will be subject to income tax and an additional 20% penalty. The account has specific rules about trustee management, investment restrictions, and reporting requirements. The bill includes provisions for inflation adjustments to contribution limits and includes safeguards for account rollovers and special circumstances like death or disability. The new savings accounts are designed to make homeownership more accessible by providing tax incentives for saving specifically for a home down payment.

Budget and Finance

https://www.congress.gov/bill/119th-congress/house-bill/6542/all-info