First Home Savings Opportunity Act of 2025
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Progress
Where this bill stands in the legislative process.
- Introduced
- Passed House
- Passed Senate
- To President
- Became Law
Overview
The First Home Savings Opportunity Act of 2025 creates a new type of savings account called a ‘down payment savings account’ that allows eligible individuals to deduct contributions made to the account. These accounts must be established as trusts meeting specific requirements, such as restrictions on investments and beneficiary control. The bill limits the deduction to earned income or $10,000, with a phase-out based on modified adjusted gross income. It also outlines the tax treatment of distributions from these accounts, including rules for rollover contributions and penalties for distributions not used for qualified down payment expenses.
Key provisions
- Allows individuals to deduct contributions made to a down payment savings account.
- Establishes specific requirements for down payment savings accounts as trusts, including trustee qualifications and asset restrictions.
- Limits the deduction to the taxpayer’s earned income or $10,000.
- Imposes a phase-out of the deduction based on modified adjusted gross income.
- Defines ‘qualified down payment expenses’ as expenses for the purchase of a first-time homebuyer’s principal residence.
- Creates rules for rollover contributions to the account.
- Specifies a 20% tax increase on distributions from the account used for non-qualified expenses.
- Expands the deduction to non-itemizers.
Who is affected
- First-time homebuyers
- Individuals saving for a down payment
- Financial institutions (banks and trustees)
Bill text
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Sponsors
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6 on record
Primary sponsor
Cosponsors
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