Congressman Coffman Introduces Federal Version of CO’s First Time Homebuyer Bill
CAR’s First-time Homebuyer Savings Act Tax Deduction, recently signed into law by Governor Hickenlooper on June 10th, is garnering nationwide attention as Congressman Coffman introduced a federal version of this bill on Friday.
CAR championed legislation creates first-time homebuyer savings accounts which allows a tax deduction for account holders on the interest earned on these accounts. A First-time Homebuyer Savings Account (FHSA) allows any Coloradan to set aside up to $50,000 toward the costs of purchasing a new home. The earnings on those funds— interest and capital gains — are free from Colorado state taxes forever.
In reaction to the news that this same legislation would be presented on a national level, 2016 Colorado Association of REALTORS® Chairman Alan Lovitt said “home affordability in Colorado and many other states has been declining recently as real estate prices rise at a faster rate than income. We believe that savings accounts that help buyers put money away for a down payment, closing costs and other expenses associated with buying your first home are a great step toward solving this problem.”
Mr. Lovitt further stated, “despite all of the positive conditions and elements of homeownership across the country, affordability for first time homeowners continues to be a significant barrier for too many states’ residents. This bill would help provide a very important financial savings resource for many people to achieve their dream of homeownership. We applaud and support Congressman Coffman’s efforts to address this vital issue.”
In a letter to Congressman Coffman, the National Association of REALTORS® weighed in with their support for the federal legislation, stating: “On behalf of the over 1.1 million members of the National Association of REALTORS®, I applaud your efforts to develop and introduce legislation that would establish First-Time Homebuyer Accounts. NAR believes that, if enacted, these accounts could provide a significant vehicle to assist those who very much would like to join the ranks of homeowners but who have been unable to save enough for the all-important down payment.”
FHSAs are a great way for future homeowners to start saving early for the costs of buying a home. These accounts will be simple and easy to set up. Not only can you open a new one, you can also transfer money from one existing savings account to a FHSA. To create an FHSA, a consumer simply includes a form (promulgated by the Department of Revenue) when they file their state taxes designating the qualified beneficiary. A qualified beneficiary can be a child or grandchild, or the account holder may designate himself or herself as the qualified beneficiary.