Big News for First-Time Buyers and Long-Term Homeowners

There is real movement in Washington around housing affordability and two proposals in particular are worth paying attention to — one for first-time buyers and one for long-term homeowners.

For first-time buyers, the First-Time Homebuyer Empowerment Act would allow anyone with a 529 education savings account to transfer up to $35,000 for a down payment on their first home, free of penalties. This is a bipartisan bill supported by the National Association of Realtors and the California Association of Realtors. The 529 account must have been maintained for at least 15 years and the money must be used within 60 days to buy a principal residence. For families who have been saving for college and find themselves with leftover funds, this could be a meaningful path to homeownership. Fast Company  The College Investor

For long-term homeowners, there is growing momentum around expanding the capital gains tax exclusion on home sales. The current exemptions of $250,000 for single filers and $500,000 for married couples have not changed since 1997, yet home values have increased dramatically since then. Several bipartisan proposals are now circulating in Congress that would double those limits and in some cases tie them to inflation going forward. CNBC

Neither bill has passed yet but the conversation is gaining real traction. As always, I recommend speaking with a tax professional about your specific situation and I am happy to connect you with one.