|By State Rep. Tarah Toohil (R-Luzerne)
Legislation is moving through the Pennsylvania House of Representatives that would help state residents realize the dream of home ownership. The toughest part for many prospective homebuyers is taking the first step, and House Bill 1981
would enable them to do just that.
The bill, which is also called the First-Time Homebuyer Savings Account (FHSA) Act, would allow individuals to set aside savings toward the eligible costs of purchasing a first home. Under the proposal, those savings may be used as a state income tax deduction.
Individuals would be able to invest up to $50,000 over a 10-year period with a contribution cap of $5,000 per year for those who file a single tax return and $10,000 for those who file a joint tax return. The money from the FHSA can be used to pay for eligible costs related to the purchase of a home, such as a down payment, closing costs and lender fees.
The legislation defines a first-time homebuyer as a Pennsylvania resident who has not owned or purchased, either individually or jointly, a single-family residence during the three-year period prior to the purchase date of a single-family residence.
If the legislation becomes law, Pennsylvania would become the latest state to provide such an incentive to prospective homebuyers. According to the National Association of Realtors®, the share of first-time homebuyers in the national home sales market has fallen from 45 percent to just 32 percent since the 2009 financial crisis.
It is estimated that this type of savings account program in Pennsylvania could result in an increase of up to 4,000 home purchases annually. The result would be an overall positive impact on the Commonwealth’s economy of up to $70 million, spurring additional economic activity, job creation and household earnings.
House Bill 1981 was unanimously approved by the House Urban Affairs Committee in April and was sent to the full House for consideration.
Representative Tarah Toohil
Pennsylvania House of Representatives
Contact: Rep. Toohil’s Office