First-Time Homebuyer Savings Act of 2026

This Act may be cited as the First-Time Homebuyer Savings Act of 2026.

Part VII of subchapter B of chapter 1 of subtitle A of the Internal Revenue Code of 1986 is amended by inserting after section 225 the following new section:

In the case of an eligible individual, there shall be allowed as a deduction for the taxable year an amount equal to the aggregate amount paid in cash during such taxable year by or on behalf of such individual to a first-time homebuyer savings account of such individual.

For purposes of this section—

The term first-time homebuyer savings account means a trust created or organized in the United States as a first-time homebuyer savings account exclusively for the purpose of paying qualified homebuyer expenses of the account beneficiary, but only if the written governing instrument creating the trust meets the following requirements:

(A) No contribution will be accepted—

(i) unless it is in cash, or

(ii) if such contribution would result in aggregate contributions to such account in excess of the contribution limit specified in subsection (c).

(B) The trustee is a bank (as defined in section 408(n)), an insurance company (as defined in section 816), or another person who demonstrates to the satisfaction of the Secretary that the manner in which such person will administer the trust will be consistent with the requirements of this section.

(C) No part of the trust assets will be invested in life insurance contracts.

(D) The assets of the trust will not be commingled with other property except in a common trust fund or common investment fund.

(E) The interest of an individual in the balance in his account is nonforfeitable.

The term eligible individual means an individual if such individual (and, if married, such individual’s spouse) had no present ownership interest in a residential property during the 3-year period ending on the present date.

For purposes of this section, the term qualified homebuyer expenses means amounts paid or incurred by the account beneficiary—

(A) in the case of an eligible individual, to purchase a principal residence, including any transaction costs relating to such purchase,

(B) in the case of an eligible individual, to construct a principal residence, including purchasing land, site preparation, design costs, permitting costs, and other expenses incurred to carry out such construction, and

(C) for any expense relating to a principal residence of the account beneficiary acquired or constructed when such account beneficiary was an eligible individual during the 3-year period beginning on the date—

(i) of the acquisition of such principal residence, or

(ii) in the case of a principal residence constructed by the taxpayer, the date on which such construction was completed.

The term account beneficiary means the individual on whose behalf the first-time homebuyer savings account was established.

The term principle residence has the same meaning as when used in section 121.

The Secretary of the Treasury shall, not later than December 31 of each calendar year, publish the estimated national average price of a single family home for the following calendar year.

The term rollover contribution means an amount paid or distributed from a first-time homebuyer savings account to the account beneficiary to the extent that—

(A) the amount received is paid into a first-time homebuyer savings account for the benefit of such beneficiary not later than the 60th day after the day on which the beneficiary receives the payment or distribution, and

(B) such account beneficiary did not receive any other amount described in subparagraph (A) from a first-time homebuyer savings account which was not includible in the individual’s gross income because of subsection (d)(2)(B) during the 1-year period ending on the date of such receipt.

The aggregate amount of contributions for any calendar year to all first-time homebuyer savings accounts maintained for the benefit of an individual shall not exceed $10,000.

In the case of a taxpayer whose adjusted gross income for the taxable year exceeds $200,000 (twice such amount in the case of a joint return), no deduction shall be allowed under subsection (a) for such taxable year.

Any amount paid or distributed out of a first-time homebuyer savings account which is used exclusively to pay qualified homebuyer expenses shall not be includible in gross income.

Any amount paid or distributed out of a first-time homebuyer savings account which is not—

(A) used exclusively to pay the qualified homebuyer expenses of the account beneficiary,

(B) a rollover contribution, or

(C) a transfer made under subsection (g),

shall be included in the gross income of such beneficiary and the amount of any tax imposed by this chapter shall be increased by 10 percent on any amount so includible.

If any excess contribution is contributed for a taxable year to any first-time homebuyer savings account of an individual, paragraph (2) shall not apply to distributions from the first-time homebuyer savings accounts of such individual (to the extent such distributions do not exceed the aggregate excess contributions to all such accounts of such individual for such year) if—

(i) such distribution is received by the individual on or before the last day prescribed by law (including extensions of time) for filing such individual's return for such taxable year, and

(ii) such distribution is accompanied by the amount of net income attributable to such excess contribution.

Any net income described in clause (ii) shall be included in the gross income of the individual for the taxable year in which it is received.

For purposes of subparagraph (A), the term excess contribution means any contribution (other than a rollover contribution) which is not excludable from gross income under this section.

A first-time homebuyer savings account is exempt from taxation under this subtitle unless such account has ceased to be a first-time homebuyer savings account. Notwithstanding the preceding sentence, any such account is subject to the taxes imposed by section 511 (relating to imposition of tax on unrelated business income of charitable, etc. organizations).

In the case of an account beneficiary who acquires (or whose spouse acquires) a present ownership interest in a residential property such individual may transfer amounts in the first-time homebuyer savings account of such individual or such individual’s spouse to an individual retirement account (as defined in section 408(a)) of such individual or such individual’s spouse during the 180 day period beginning on the date on which the 3-year period described in subsection (b)(3)(C) ends with respect to such acquisition.

A first-time homebuyer savings account shall cease to be a first-time homebuyer savings account on the first day after the 180 day period described in paragraph (1) and amounts in such account shall be treated as distributed to the account beneficiary.

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Section 3121(a) of such Code is amended—

(1) in paragraph (22)(B), by striking; or and inserting a comma,

(2) in paragraph (23), by striking section section 139B(a). and inserting section 139B(a), or, and

(3) by inserting after paragraph (23) the following new paragraph:

(24) any amount which is excludible from gross income of the employee under section 225A(a).

(3) .

Section 4973(a) of such Code is amended—

(A) in paragraph (5), by striking or,

(B) in paragraph (6), by inserting or after the comma, and

(C) by inserting after paragraph (6) the following new paragraph:

(7) a first-time homebuyer savings account (within the meaning of section 225A(b)(1)),

(C) .

Section 4973 of such Code is amended by adding at the end the following new subsection:

For purposes of this section, in the case of a first-time homebuyer savings account (within the meaning of section 225A(b)(1)), the term excess contribution means the amount by which the amount contributed for the taxable year to such account exceeds the contribution limit under 225A(c)(1).

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The table of sections for part VII of subchapter B of chapter 1 of subtitle A of such Code is amended by inserting after the item relating to section 225 the following new item:

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The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.