First-Time Home Buyers Savings Account Program
Homeownership has been an essential element of the American Dream for decades and continues to be so today. The benefits of homeownership are many and far-reaching. Studies show that homeownership has a positive social impact in communities, such as heightened civic participation, increased educational achievement, lower crime rates, raising property values, and homeowners maintain and improve their properties relative to renters. Overall, higher rates of homeownership correspond to more stable neighborhoods and communities.
Financially, the housing sector is a huge part of our economy, accounting for a large percentage of total economic activity (15.6% in 2015). However, rising costs of housing and crippling student loan debt are impacting younger generations and their ability to achieve the American Dream of homeownership. Saving for a down payment and closing costs can be challenging. A First-Time Home Buyer Savings Account (FHSA) Program will provide an opportunity for residents to save and grow funds to apply towards the purchase of a home.
Did You Know?
- Accounts may be opened by first-time homebuyers and those re-entering the housing market, if they have not owned a home within five 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 - $6000/filing individually, $12,000/filing jointly.
- Total deductions from deposits and earnings cannot exceed $60,000.
- 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- Penalties apply if funds withdrawn or used for any non-qualified purpose.
- There are an estimated 570,000 renters in Alabama. Approximately 328,000 aged 44 or less.
- An estimated .2%-1.1% of eligible residents (590 to 3,675) households would use a First-Time Home Buyers Savings Account.
- The First-Time Home Buyer Savings Account Program is projected to increase home sale transactions by 130 to 4,160 sales per year.
- The First-Time Home Buyer Savings Account Program would have a positive net economic impact on the state that would range from $2.4 million to $26.8 million annually in economic activity due to increased home purchases spurred by the FHSA program.
- The First-Time Home Buyer Savings Account Program would create up to 245 jobs and increase annual earning for residents by $613,000 to $6.8 million in numerous sectors of the economy affected by homeownership.
The Alabama Realtors® is the largest statewide organization of real estate professionals comprised of over 14,000 members. United by adherence to a Code of Ethics, our members work as real estate professionals in the sale, lease, appraisal, management and development of residential, commercial, rural and resort properties throughout Alabama.
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