I 

114TH CONGRESS 

2D SESSION H. R. 5575 

To amend the Internal Revenue Code of 1986 to provide a tax-preferred 

savings account for first-time homebuyers. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 24, 2016 

Mr. COFFMAN (for himself, Mr. SEAN PATRICK MALONEY of New York, and 

Mrs. COMSTOCK) introduced the following bill; which was referred to the 

Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to provide 

a tax-preferred savings account for first-time homebuyers. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘First-Time Homebuyer 

5 Savings Account Act of 2016’’. 

6 SEC. 2. FIRST-TIME HOMEBUYER ACCOUNT. 

7 (a) IN GENERAL.—Part VIII of subchapter F of 

8 chapter 1 of the Internal Revenue Code of 1986 is amend9 ed by adding at the end the following new section: 


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1 ‘‘SEC. 530A. FIRST-TIME HOMEBUYER ACCOUNT. 

2 ‘‘(a) IN GENERAL.—A first-time homebuyer account 

3 shall be exempt from taxation under this subtitle. Not4 withstanding the preceding sentence, the first-time home5 buyer account shall be subject to the taxes imposed by 

6 section 511 (relating to imposition of tax on unrelated 

7 business income of charitable organizations). 

8 ‘‘(b) FIRST-TIME HOMEBUYER ACCOUNT.—The term 

9 ‘first-time homebuyer account’ means a trust created or 

10 organized in the United States exclusively for the purpose 

11 of paying the qualified principal residence purchase ex12 penditures of an individual who is the designated bene13 ficiary of the trust (and designated as a first-time home14 buyer account at the time created or organized), but only 

15 if the written governing instrument creating the trust 

16 meets the following requirements: 

17 ‘‘(1) No contribution will be accepted— 

18 ‘‘(A) unless it is in cash, 

19 ‘‘(B) except in the case of a rollover con20 tribution, if such contribution would result in 

21 aggregate contributions— 

22 ‘‘(i) for the taxable year exceeding 

23 $14,000 (200 percent of such amount in 

24 effect for the taxable year in the case of in25 dividuals who are married, own a first-time 


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1 homebuyer account jointly, and file a joint 

2 return for the taxable year), 

3 ‘‘(ii) for all taxable years exceeding 

4 $50,000, and 

5 ‘‘(C) if the fair market value of the ac6 count to exceeds, or to the extent such contribu7 tion would result in the fair market value of the 

8 account exceeding, $150,000. 

9 ‘‘(2) The trustee is a bank (as defined in sec10 tion 408(n)) or another person who demonstrates to 

11 the satisfaction of the Secretary that the manner in 

12 which that person will administer the trust will be 

13 consistent with the requirements of this section or 

14 who has so demonstrated with respect to any indi15 vidual retirement plan. 

16 ‘‘(3) No part of the trust assets will be invested 

17 in life insurance contracts. 

18 ‘‘(4) The assets of the trust shall not be com19 mingled with other property except in a common 

20 trust fund or common investment fund. 

21 ‘‘(c) QUALIFIED PRINCIPAL RESIDENCE PURCHASE

22 EXPENDITURES.—For purposes of this section— 

23 ‘‘(1) IN GENERAL.—The term ‘qualified prin24 cipal residence purchase expenditures’ means, with 


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1 respect to a designated beneficiary who is a first2 time homebuyer— 

3 ‘‘(A) any amount paid toward the purchase 

4 price of a principal residence of the beneficiary, 

5 ‘‘(B) any amount required to be paid to 

6 settle the purchase of such residence, and 

7 ‘‘(C) any amount required to be paid by 

8 the beneficiary to obtain acquisition indebted9 ness with respect to such residence. 

10 ‘‘(2) PURCHASE PRICE.—The term ‘purchase 

11 price’ means the adjusted basis of the residence on 

12 the date such residence is purchased. 

13 ‘‘(d) TAX TREATMENT.— 

14 ‘‘(1) DISTRIBUTIONS.— 

15 ‘‘(A) IN GENERAL.—If distributions from a 

16 first-time homebuyer account for the taxable 

17 year do not exceed the qualified principal resi18 dence purchase expenditures of the designated 

19 beneficiary for the taxable year, no amount 

20 shall be includible in gross income. 

21 ‘‘(B) DISTRIBUTIONS IN EXCESS OF EX22 PENDITURES.—If such distributions exceed 

23 such expenditures for the taxable year, such 

24 distributions shall be includible in the gross in25 come of the distributee in the manner as proVerDate Sep 11 2014 03:32 Jun 28, 2016 Jkt 059200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H5575.IH H5575

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1 vided in section 72 (to the extent not excluded 

2 from gross income under any other provision of 

3 this chapter), reduced by an amount which 

4 bears the same ratio to the amount otherwise so 

5 includible as such expenses bear to such dis6 tributions. 

7 ‘‘(C) ADDITIONAL TAX FOR DISTRIBU8 TIONS NOT USED FOR FIRST-TIME HOMEBUYER

9 PURPOSES.— 

10 ‘‘(i) IN GENERAL.—The tax imposed 

11 by this chapter for any taxable year on any 

12 taxpayer who receives a payment or dis13 tribution from a first-time homebuyer ac14 count which is includible in gross income 

15 shall be increased by the applicable per16 centage of the amount which is so includ17 ible. 

18 ‘‘(ii) APPLICABLE PERCENTAGE.—For 

19 purposes of clause (i), the applicable per20 centage is— 

21 ‘‘(I) in the case of a payment or 

22 distribution made not later than 10 

23 years after the date of the first con24 tribution to the account, 5 percent, 

25 and 


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1 ‘‘(II) in the case of any other 

2 payment or distribution, 10 percent. 

3 ‘‘(iii) EXCEPTIONS.—Clause (i) shall 

4 not apply if the payment or distributions— 

5 ‘‘(I) is made to a beneficiary (or 

6 to the estate of the designated bene7 ficiary) on or after the death of the 

8 designated beneficiary, 

9 ‘‘(II) is attributable to the des10 ignated beneficiary’s being disabled 

11 (within the meaning of section 

12 72(m)(7)), or 

13 ‘‘(III) are made under rules simi14 lar to the rules under section 

15 408(d)(4) (relating to contributions 

16 returned before due date of return). 

17 ‘‘(D) ROLLOVERS.—Subparagraph (A) 

18 shall not apply to any amount paid or distrib19 uted from a first-time homebuyer account to 

20 the extent that the amount received is paid, not 

21 later than the 60th day after the date of such 

22 payment or distribution, into another first-time 

23 homebuyer account for the benefit of the same 

24 beneficiary. The preceding sentence shall not 

25 apply to any payment or distribution if it apVerDate Sep 11 2014 03:32 Jun 28, 2016 Jkt 059200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H5575.IH H5575

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1 plied to any prior payment or distribution dur2 ing the 12-month period ending on the date of 

3 the payment or distribution. 

4 ‘‘(E) CHANGE IN BENEFICIARY.—Any 

5 change in the beneficiary of a first-time home6 buyer account shall not be treated as a distribu7 tion for purposes of subparagraph (A). 

8 ‘‘(F) DISALLOWANCE OF EXCLUDED

9 AMOUNTS AS DEDUCTION, CREDIT, OR EXCLU10 SION.—No deduction, credit, or exclusion shall 

11 be allowed to the taxpayer under any other sec12 tion for any qualified principal residence pur13 chase expenditures to the extent taken into ac14 count in determining the amount of the exclu15 sion under this paragraph. 

16 ‘‘(2) ESTATE AND GIFT TAX WITH RESPECT TO

17 THE ACCOUNT.—Rules similar to the rules of para18 graphs (2), (4), and (5) of section 529(c) shall apply 

19 for purposes of this section. 

20 ‘‘(3) TAX TREATMENT AFTER DEATH OF AC21 COUNT HOLDER.— 

22 ‘‘(A) JOINTLY HELD ACCOUNTS.—In the 

23 case of a first-time homebuyer account which 

24 was jointly held by spouses, if the surviving 

25 spouse acquires the deceased spouse’s interest 


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1 in a first-time homebuyer account by reason of 

2 being the designated beneficiary of such ac3 count at the death, such account shall be treat4 ed as if the spouse were the sole account holder. 

5 ‘‘(B) OTHER CASES.— 

6 ‘‘(i) IN GENERAL.—If, by reason of 

7 the death of the account holder, any per8 son acquires the account holder’s interest 

9 in an first-time homebuyer account in a 

10 case to which subparagraph (A) does not 

11 apply— 

12 ‘‘(I) such account shall cease to 

13 be a first-time homebuyer account as 

14 of the date of death, and 

15 ‘‘(II) an amount equal to the fair 

16 market value of the assets in such ac17 count on such date shall be includible 

18 if such person is not the estate of 

19 such holder, in such person’s gross in20 come for the taxable year which in21 cludes such date, or if such person is 

22 the estate of such holder, in such 

23 holder’s gross income for the last tax24 able year of such holder. 


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1 ‘‘(ii) DEDUCTION FOR ESTATE

2 TAXES.—An appropriate deduction shall be 

3 allowed under section 691(c) to any person 

4 (other than the decedent or the decedent’s 

5 spouse) with respect to amounts included 

6 in gross income under clause (i). 

7 ‘‘(e) OTHER DEFINITIONS AND SPECIAL RULES.— 

8 For purposes of this section— 

9 ‘‘(1) FIRST-TIME HOMEBUYER.— 

10 ‘‘(A) IN GENERAL.—The term ‘first-time 

11 homebuyer’ means any individual if such indi12 vidual (and if married, such individual’s spouse) 

13 has had no present ownership interest in a prin14 cipal residence. 

15 ‘‘(B) SPECIAL RULE FOR DIVORCED INDI16 VIDUALS.—Any individual who is divorced and 

17 is not described in subparagraph (A) shall be 

18 treated as a first-time homebuyer for purposes 

19 of this section if such individual had no present 

20 ownership interest in a principal residence since 

21 such individual’s most recent divorce and dur22 ing the 3-year period ending on the date of the 

23 purchase of the principal residence with respect 

24 to which payments from a first-time homebuyer 

25 account are made under this section. 


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1 ‘‘(2) PRINCIPAL RESIDENCE.—The term ‘prin2 cipal residence’ has the same meaning as when used 

3 in section 121. 

4 ‘‘(3) DESIGNATED BENEFICIARY.—The term 

5 ‘designated beneficiary’ means— 

6 ‘‘(A) the individual designated at the com7 mencement of the first-time homebuyer account 

8 as the beneficiary of amounts paid (or to be 

9 paid) to the account, or 

10 ‘‘(B) in the case of a change in bene11 ficiaries described in subsection (d)(1)(C), the 

12 individual who is the new beneficiary 

13 ‘‘(4) ACCOUNT OWNERSHIP.—Except in the 

14 case of individuals who are married, an account may 

15 be owned by only one individual and may only have 

16 one designated beneficiary. 

17 ‘‘(5) COST-OF-LIVING ADJUSTMENT.—In the 

18 case of any taxable year beginning in a calendar 

19 year after 2017, the dollar amounts under sub20 section (b)(1) shall be increased by an amount equal 

21 to— 

22 ‘‘(A) such dollar amount, multiplied by 

23 ‘‘(B) the cost-of-living adjustment deter24 mined under section 1(f)(3) for the calendar 

25 year in which the taxable year begins, deterVerDate Sep 11 2014 03:32 Jun 28, 2016 Jkt 059200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H5575.IH H5575

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1 mined by substituting ‘calendar year 2007’ for 

2 ‘calendar year 1992’ in subparagraph (B) 

3 thereof. 

4 If any amount after adjustment under the preceding 

5 sentence is not a multiple of $100, such amount 

6 shall be rounded to the next lower multiple of 

7 $100.’’. 

8 (b) EXCESS CONTRIBUTIONS.— 

9 (1) IN GENERAL.—Section 4973(a) of such 

10 Code is amended by striking ‘‘or’’ at the end of 

11 paragraph (5), by inserting ‘‘or’’ at the end of para12 graph (6), and by inserting after paragraph (6) the 

13 following new paragraph: 

14 ‘‘(7) a first-time homebuyer account (within the 

15 meaning of section 530A),’’. 

16 (2) EXCESS CONTRIBUTIONS.—Section 4973 of 

17 such Code is amended by adding at the end the fol18 lowing new subsection: 

19 ‘‘(i) EXCESS CONTRIBUTIONS TO FIRST-TIME HOME20 BUYER ACCOUNT.—In the case of a first-time homebuyer 

21 account, the term ‘excess contributions’ means the amount 

22 by which the amount contributed for the taxable year to 

23 such account (other than contributions described in sec24 tion 530A(d)(1)(C) (iv) and (v)) exceeds the contribution 

25 limits under section 530A(b). For purposes of the preVerDate Sep 11 2014 03:32 Jun 28, 2016 Jkt 059200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H5575.IH H5575

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1 ceding sentence, any contribution which is distributed 

2 from the account in a distribution to which section 

3 530A(d)(1)(C)(iii)(III) applies shall be treated as an 

4 amount not contributed.’’. 

5 (c) CLERICAL AMENDMENT.—The table of sections 

6 for part VIII of subchapter F of chapter 1 of such Code 

7 is amended by adding at the end the following new item: 

‘‘Sec. 530A. First-time homebuyer account.’’. 

8 (d) EFFECTIVE DATE.—The amendments made by 

9 this section shall apply to taxable years beginning after 

10 the date of the enactment of this Act. 

Æ 


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