HARRISBURG – Rep. Rosemary M. Brown (R-Monroe/Pike), a known advocate for financial literacy, announced that her legislation, House Bill 128, which would establish first-time homebuyers savings accounts in the Commonwealth was passed by the House (188-1) on Feb. 21.
“A home, for most Pennsylvanians, symbolizes establishing their own roots and building a foundation of stability for themselves and their families,” said Rosemary Brown. “Purchasing a home today has become more and more difficult for Pennsylvanians, which is why I introduced this legislation as it would act as a tool to help people plan and save money toward a home purchase.”
The goal of the legislation is to allow Pennsylvanians to set aside savings, which may be used as a deduction on state income tax, toward the eligible costs of purchasing a first home.
HB 128 allows account holders to contribute a total of $50,000 over a 10-year time period. There is an annual contribution cap of $5,000 for those that file as a single taxpayer, and $10,000 for those that file a joint tax return. The maximum amount of all contributions to the account is $150,000.
If the money in the FHSA is not used after the 10-year expiration date, or if an account holder or beneficiary withdraws any amount from the account and uses the withdrawal for purposes other than the costs eligible under this act, or uses the property as an ineligible use, then the entire amount withdrawn must be included in the account holder’s taxable income as interest income for the tax year the withdrawal was made.
It is estimated that this type of savings account program in Pennsylvania could result in an annual increase of up to 4,000 home purchases within the state.
The result would be an overall positive impact on Pennsylvania’s economy, spurring additional economic activity, job creation and earnings for households. It’s estimated that the economic impact could range between $7.8 million to $68.8 million.
House Bill 128 now moves to the Senate for consideration. Rep. Ryan Bizzarro (D-Erie) was the co-prime sponsor.