How It Works

How It Works

  • Accounts may be opened by first-time homebuyers and those re-entering the housing market, if they have not owned a home within ten years.
  • Savings from the account can be used to pay for a down payment and/or closing costs for the purchase of a single-family dwelling.
  • The principal deposits and earnings from the account are deductible.
  • Limits on deductions for principal contributions - $5000/filing individually, $10,000/filing jointly.
  • Total deductions from deposits and earnings cannot exceed $50,000.
  • Qualified expenditures must be made in five years from opening the account.
  • The account can be opened at any institution authorized to do business in Alabama, and only marketable securities or cash may be contributed.
  • Penalties apply if funds withdrawn or used for any non-qualified purpose.