First-Time Homebuyer Accounts Proposed

Representative Kat Cammack (R-FL) and Jim Moylan (R-GU) have introduced H.R. 7422, the Next-Generation Equity Savings Tool Act (NEST Act). The bill proposes a first-time homebuyer account under Internal Revenue Code Sec. 223 for individuals to make tax deductible contributions. Contributions would be deductible up to a limit that is based on 20 percent of the median home sale price in the state where the account is established. The limit would be adjusted annually to reflect changes in the median home prices. Any employer contributions to the account would be excluded from income and payroll taxes. Distributions not used for home ownership expenses would be subject to income tax and a 20 percent penalty tax.