FHSA, First-Time Homebuyers Saving Account Act.
FHSA is way for first-time home buyers to enter market.
FHSA introduced by Democrats and Republicans.
First-time home buyers in Colorado would be able to shelter as much as $150,000 from state taxes to help them buy a home in the state, under a bill introduced this week.
The First-Time Homebuyers Savings Account Act was introduced on Wednesday evening.
The bill is being sponsored by Representatives Crisanta Duran (D-Denver) and Joseph Salazar (D-Thornton) with Senators Mark Scheffel (R-Parker) and Beth Martinez-Humenik (R-Thornton).
The FHSA, technically called HB16-1467, allows the deposit or transfer from another account of up to $50,000 for the sole purpose of helping a first-time homebuyer make a home purchase in Colorado.
FHSA accounts can grow to a maximum of $150,000.
FHSA contributions would be limited to $14,000 per year for taxpayers filing individually and $28,000 for those filing a joint return up to the account maximum of $50,000.
Interest earned and capital gains would not be taxed by the State of Colorado as long as the funds are used for the designated purpose of a first-time home buyer purchasing their slice of the American Dream. Federal taxes would still apply on the interest earned.
The Colorado Association of Realtors supports the bill.
The bill is being proposed at a time when Denver-area housing prices are at record levels.
“Home affordability in Colorado has been declining recently as real estate prices throughout the state rise at a faster rate than income,” said former CAR Chairman David Barber.
Barber appointed a special advisory group of industry leaders to examine the issue of affordability and to come up with some new ideas of addressing the issue.
“We believe that savings accounts that help buyers put money away for a down payment, closing costs and other expenses associated with buying their first home are a great step toward solving this problem,” Barber said.
Colorado is not the first state with such a program.
Montana implemented a similar program in 1998 and more recently Virginia instituted its own FHSAs. Iowa and Georgia also have explored making these accounts available in their states.
FHSA is similar to 529 college saving accounts.
Colorado, along with other states recognize the social benefits of citizens owning their first home, beginning to plant roots in a neighborhood, and becoming active and contributing members of their communities, according to proponents of the proposed legislation..
“The ability to own a home is an important part of the American dream,” Duran said.
“My colleagues and I believe that these special savings accounts will help make that dream a reality for many more Coloradoan,” Duran continued.
“Young couples, single, parents and grandparents will now be able to save toward that first home by stretching their dollars through removing the state tax component,” according to Duran.
To create a FHSA, account holders would be required to file a form with their state taxes designating the qualified beneficiary who can be a child or grandchild.
The account holder also could designate himself as the qualified beneficiary.
Almost any financial institution account, including brokerage accounts, can serve as a FHSA.
“Despite all of the positive conditions and elements of homeownership across our state, affordability for first time homeowners continues to be a significant barrier for too many of our state’s residents,” said CAR Chairman, Alan Lovitt.
“This bill would help provide a very important financial savings resource for many people to achieve their dream of homeownership,” Lovitt said.
For more information: First-time Homebuyers Saving Account
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