Bill > S721

This bill establishes a program to help first-time homebuyers save for and purchase a home by creating tax-advantaged savings accounts and providing financial assistance for closing costs. Specifically, it directs the department of housing and community development to create a closing costs assistance program that can provide grants of up to $2,500 to income-eligible first-time homebuyers, defined as individuals who have used at least $1,000 from a designated first-time home-buying account and whose income is 90% or less of the median area income as determined by the U.S. Department of Housing and Urban Development (HUD). The bill also mandates the creation of a first-time home-buying program administered by financial institutions, allowing individuals to open or convert existing savings accounts for this purpose, with contributions up to $4,000 per year not being considered taxable income and being deductible. Distributions from these accounts for qualified first-time homebuyer expenses, as defined by federal law, will also be tax-free, while non-qualified distributions may be subject to taxes and a penalty, with penalties potentially funding the closing costs assistance program. Additionally, the bill amends tax laws to exempt qualifying distributions from these accounts from state taxes and allows for tax credits for certain prior contributions to these accounts.