A bill advancing through the New Jersey Legislature would create a tax-free savings account program to help first-time homebuyers accumulate the money for a down payment.
Money deposited in those accounts would be excluded from gross income, said Assemblyman Troy Singleton.
“We realize that one of the biggest stumbling blocks for folks trying to get their first home is having the resources necessary to make that first payment,” said Singleton, D-Burlington. “So what we’ve tried to do is mimic the highly successful 529 plans that folks have used for college education.”
Arnold Cohen with the Housing and Community Development Network of New Jersey said it will not be just young potential homebuyers who would be helped.
“It’s those working folks who are struggling regardless of their age,” he said. “A lot of folks have been renting for a long time because, in this economy, it just takes longer to accumulate those savings to be able to have the down payment.”
The maximum amount of money that could be deposited in one of the tax-free accounts hasn’t been determined.
And the savings would be taxed if they were withdrawn for something other than a first-time home purchase.