First-Time Home Buyer Empowerment Act

Key Points

• This bill would change the rules for college savings accounts, known as 529 plans. It would allow people to take out up to $35,000 to buy their first home without having to pay the usual tax penalties on that money.
• To qualify for this benefit, the savings account must have been open for at least 15 years. Additionally, the specific money being withdrawn must have been sitting in the account for at least five years before it is used for the home purchase.
• This policy aims to help young adults who have leftover money in their college funds. Instead of the money being stuck or subject to high fees, they could use it to help with a down payment or closing costs on their first house.
• There is a 'stay-in-place' rule to prevent people from taking advantage of the system. If you sell the house or move out within five years of buying it, you may have to pay back the tax savings. This penalty decreases by 20% for every year you live in the home.
• The $35,000 limit is a lifetime maximum. This limit is shared with other rules that allow people to move college savings into retirement accounts. This means you can use the money for a home or retirement, but the total amount for both cannot exceed $35,000.