I 

116TH CONGRESS 

1ST SESSION H. R. 4120 

To amend the Internal Revenue Code of 1986 to provide for the tax treatment 

of first-time homeowner assistance programs established by States. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 30, 2019 

Mr. LAWSON of Florida (for himself and Ms. TLAIB) 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 

for the tax treatment of first-time homeowner assistance 

programs established by States. 

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 Home5 owners Assistance Act of 2019’’. 

6 SEC. 2. QUALIFIED FIRST-TIME HOMEOWNER ASSISTANCE 

7 PROGRAM. 

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

9 chapter 1 of the Internal Revenue Code of 1986 is amend10 ed by adding at the end the following new section: 


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1 ‘‘SEC. 530A. QUALIFIED FIRST-TIME HOMEOWNER ASSIST2 ANCE PROGRAM. 

3 ‘‘(a) GENERAL RULE.—A qualified first-time home4 owner assistance program shall be exempt from taxation 

5 under this subtitle. Notwithstanding the preceding sen6 tence, such program shall be subject to the taxes imposed 

7 by section 511 (relating to imposition of tax on unrelated 

8 business income of charitable organizations). 

9 ‘‘(b) QUALIFIED FIRST-TIME HOMEOWNER ASSIST10 ANCE PROGRAM.—For purposes of this section— 

11 ‘‘(1) IN GENERAL.—The term ‘qualified first12 time homeowner assistance program’ means a pro13 gram established and maintained by a State, or 

14 agency or instrumentality thereof— 

15 ‘‘(A) under which a person may make con16 tributions to a first-time homeowner assistance 

17 account, 

18 ‘‘(B) under which neither contributors nor 

19 beneficiaries are prohibited by reason of resi20 dency within the State, and 

21 ‘‘(C) which meets the other requirements 

22 of this subsection. 

23 ‘‘(2) CASH CONTRIBUTIONS.—A program shall 

24 not be treated as a qualified first-time homeowner 

25 assistance program unless it provides that contribu26 tions— 


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1 ‘‘(A) may only be made in cash, 

2 ‘‘(B) may not be made after the date on 

3 which the account beneficiary attains age 40, or 

4 ‘‘(C) except in the case of rollover con5 tributions, if such contribution would result in 

6 aggregate contributions for all taxable years ex7 ceeding $20,000. 

8 ‘‘(3) SEPARATE ACCOUNTING.—A program shall 

9 not be treated as a qualified first-time homeowner 

10 assistance program unless it provides separate ac11 counting for each designated beneficiary. 

12 ‘‘(4) LIMITED INVESTMENT DIRECTION.—A 

13 program shall not be treated as a qualified first-time 

14 homeowner assistance program unless it provides 

15 that any contributor to, or designated beneficiary 

16 under, such program may, directly or indirectly, di17 rect the investment of any contributions to the pro18 gram (or any earnings thereon) no more than 2 

19 times in any calendar year. 

20 ‘‘(5) NO PLEDGING OF INTEREST AS SECU21 RITY.—A program shall not be treated as a qualified 

22 first-time homeowner assistance program if it allows 

23 any interest in the program or any portion thereof 

24 to be used as security for a loan. 


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1 ‘‘(6) CERTAIN RESTRICTIONS DISALLOWED.—A 

2 program shall not be treated as a qualified first-time 

3 homeowner assistance program unless, with respect 

4 to each first-time homeowner assistance account, the 

5 program does not— 

6 ‘‘(A) prohibit the designated beneficiary 

7 from acquiring or constructing a principal resi8 dence outside of the State, 

9 ‘‘(B) limit any State tax preferences for 

10 contributions to these accounts based on the 

11 residence of the contributor or the designated 

12 beneficiary, or 

13 ‘‘(C) condition withdrawals, or limit any 

14 State tax preferences for withdrawals, from 

15 these accounts from being applied only with re16 spect to residences located within the State. 

17 ‘‘(c) FIRST-TIME HOMEOWNER ASSISTANCE AC18 COUNT.—For purposes of this section— 

19 ‘‘(1) IN GENERAL.—The term ‘first-time home20 owner assistance account’ means an account estab21 lished under a qualified first-time homeowner assist22 ance program for the purpose of providing qualified 

23 down payment assistance to the designated bene24 ficiary of the account. 


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1 ‘‘(2) QUALIFIED DOWN PAYMENT ASSIST2 ANCE.— 

3 ‘‘(A) IN GENERAL.—The term ‘qualified 

4 down payment assistance’ means a distribu5 tion— 

6 ‘‘(i) to a designated beneficiary who is 

7 a first-time homeowner of a principal resi8 dence in the United States, 

9 ‘‘(ii) under a qualified first-time 

10 homeowner assistance program in connec11 tion with the acquisition, construction, or 

12 substantial improvement of a principal res13 idence at or before the time of such acqui14 sition or construction, and 

15 ‘‘(iii) the amount of which, when 

16 added to all prior qualified down payment 

17 assistance under this subparagraph during 

18 any taxable year, does not exceed 10 per19 cent of the cost of acquiring, constructing, 

20 or substantially improving the principal 

21 residence of the designated beneficiary. 

22 ‘‘(B) FIRST-TIME HOMEOWNER.—The 

23 term ‘first-time homeowner’ means any indi24 vidual if such individual (and if married, such 

25 individual’s spouse) had no present ownership 


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1 interest in a principal residence during the 3- 

2 year period ending on the date of the acquisi3 tion, construction, or substantial improvement 

4 of the principal residence. 

5 ‘‘(C) PRINCIPAL RESIDENCE.—The term 

6 ‘principal residence’ has the same meaning as 

7 when used in section 121. 

8 ‘‘(D) EXCEPTION.—A residence may be 

9 taken into account for purposes of this para10 graph only if— 

11 ‘‘(i) the residence is not acquired from 

12 a person related to the person acquiring 

13 such residence (or, if married, such indi14 vidual’s spouse), and 

15 ‘‘(ii) the basis of the residence in the 

16 hands of the person acquiring such resi17 dence is not determined— 

18 ‘‘(I) in whole or in part by ref19 erence to the adjusted basis of such 

20 residence in the hands of the person 

21 from whom acquired, or 

22 ‘‘(II) under section 1014(a) (re23 lating to property acquired from a de24 cedent). 


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1 ‘‘(E) CONSTRUCTION.—A residence which 

2 is constructed by the taxpayer shall be treated 

3 as purchased by the taxpayer on the date the 

4 taxpayer first occupies such residence. 

5 ‘‘(F) SPECIAL RULES RELATING TO MAR6 RIAGE.— 

7 ‘‘(i) MARRIED COUPLES MUST FILE

8 JOINT RETURN.—If the designated bene9 ficiary is married on the date of the dis10 tribution, the distribution shall not be 

11 treated as qualified down payment assist12 ance unless the taxpayer and the tax13 payer’s spouse file a joint return for the 

14 taxable year. 

15 ‘‘(ii) MARITAL STATUS.—An indi16 vidual legally separated from his spouse 

17 under a decree of divorce or of separate 

18 maintenance shall not be considered as 

19 married. 

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

21 ‘designated beneficiary’ with respect to a first-time 

22 homeowner assistance account means— 

23 ‘‘(A) the individual designated at the es24 tablishment of the account as the beneficiary of 


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1 amounts paid (or to be paid) to the account, 

2 and 

3 ‘‘(B) in the case of a change in bene4 ficiaries described in subsection (d)(3)(C), the 

5 individual who is the new beneficiary of the ac6 count. 

7 ‘‘(4) MEMBER OF FAMILY.—The term ‘member 

8 of the family’ means, with respect to any designated 

9 beneficiary— 

10 ‘‘(A) the spouse of such beneficiary, 

11 ‘‘(B) an individual who bears a relation12 ship to such beneficiary which is described in 

13 subparagraphs (A) through (G) of section 

14 152(d)(2), 

15 ‘‘(C) the spouse of any individual described 

16 in subparagraph (B), and 

17 ‘‘(D) any first cousin of such beneficiary. 

18 ‘‘(d) TAX TREATMENT OF DESIGNATED BENE19 FICIARIES AND CONTRIBUTORS.— 

20 ‘‘(1) IN GENERAL.—Except as otherwise pro21 vided in this subsection, no amount shall be includ22 ible in gross income of— 

23 ‘‘(A) a designated beneficiary under a 

24 qualified first-time homeowner assistance pro25 gram, or 


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1 ‘‘(B) a contributor to such program on be2 half of a designated beneficiary, with respect to 

3 any distribution or earnings under such pro4 gram. 

5 ‘‘(2) GIFT TAX TREATMENT OF CONTRIBU6 TIONS.—For purposes of chapters 12 and 13— 

7 ‘‘(A) IN GENERAL.—Any contribution to a 

8 qualified first-time homeowner assistance pro9 gram on behalf of any designated beneficiary— 

10 ‘‘(i) shall be treated as a completed 

11 gift to such beneficiary which is not a fu12 ture interest in property, and 

13 ‘‘(ii) shall not be treated as a qualified 

14 transfer under section 2503(e). 

15 ‘‘(B) TREATMENT OF EXCESS CONTRIBU16 TIONS FOR GIFT TAX PURPOSES.—If the aggre17 gate amount of contributions described in sub18 paragraph (A) during the calendar year by a 

19 donor exceeds the limitation for such year 

20 under section 2503(b), such aggregate amount 

21 shall, at the election of the donor, be taken into 

22 account for purposes of such section ratably 

23 over the 5-year period beginning with such cal24 endar year. 

25 ‘‘(3) DISTRIBUTIONS.— 


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1 ‘‘(A) IN GENERAL.—Any distribution 

2 under a qualified first-time homeowner assist3 ance program shall be includible in the gross in4 come of the distributee in the manner as pro5 vided under section 72 to the extent not ex6 cluded from gross income under this paragraph. 

7 ‘‘(B) DISTRIBUTIONS FOR QUALIFIED

8 DOWN PAYMENT ASSISTANCE.—For purposes of 

9 this paragraph, if— 

10 ‘‘(i) distributions under a qualified 

11 first-time homeowner assistance program 

12 do not exceed the qualified down payment 

13 assistance, no amount shall be includible in 

14 gross income, and 

15 ‘‘(ii) in any other case, the amount 

16 otherwise includible in gross income shall 

17 be reduced by an amount which bears the 

18 same ratio to such amount as such assist19 ance bear to such distributions. 

20 ‘‘(C) CHANGE IN BENEFICIARIES OR PRO21 GRAMS.— 

22 ‘‘(i) ROLLOVERS.—Subparagraph (A) 

23 shall not apply to that portion of any dis24 tribution which, within 60 days of such 

25 distribution, is transferred— 


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1 ‘‘(I) to another qualified distribu2 tion under a qualified first-time home3 owner assistance program or the ben4 efit of the designated beneficiary, or 

5 ‘‘(II) to the credit of another des6 ignated beneficiary under a qualified 

7 distribution under a qualified first8 time homeowner assistance program 

9 who is a member of the family of the 

10 designated beneficiary with respect to 

11 which the distribution was made. 

12 ‘‘(ii) CHANGE IN DESIGNATED BENE13 FICIARIES.—Any change in the designated 

14 beneficiary of an interest in a qualified dis15 tribution under a qualified first-time home16 owner assistance program shall not be 

17 treated as a distribution for purposes of 

18 subparagraph (A) if the new beneficiary is 

19 a member of the family of the old bene20 ficiary. 

21 ‘‘(iii) LIMITATION ON CERTAIN ROLL22 OVERS.—Clause (i)(I) shall not apply to 

23 any transfer if such transfer occurs within 

24 12 months from the date of a previous 

25 transfer to any qualified distribution under 


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1 a qualified first-time homeowner assistance 

2 program for the benefit of the designated 

3 beneficiary. 

4 ‘‘(4) ESTATE TAX TREATMENT.— 

5 ‘‘(A) IN GENERAL.—No amount shall be 

6 includible in the gross estate of any individual 

7 for purposes of chapter 11 by reason of an in8 terest in a qualified distribution under a quali9 fied first-time homeowner assistance program. 

10 ‘‘(B) AMOUNTS INCLUDIBLE IN ESTATE OF

11 DESIGNATED BENEFICIARY IN CERTAIN

12 CASES.—Subparagraph (A) shall not apply to 

13 amounts distributed on account of the death of 

14 a beneficiary. 

15 ‘‘(C) AMOUNTS INCLUDIBLE IN ESTATE OF

16 DONOR MAKING EXCESS CONTRIBUTIONS.—In 

17 the case of a donor who makes the election de18 scribed in paragraph (2)(B) and who dies be19 fore the close of the 5-year period referred to 

20 in such paragraph, notwithstanding subpara21 graph (A), the gross estate of the donor shall 

22 include the portion of such contributions prop23 erly allocable to periods after the date of death 

24 of the donor. 


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1 ‘‘(5) OTHER GIFT TAX RULES.—For purposes 

2 of chapters 12 and 13— 

3 ‘‘(A) TREATMENT OF DISTRIBUTIONS.— 

4 Except as provided in subparagraph (B), in no 

5 event shall a distribution from a qualified dis6 tribution under a qualified first-time home7 owner assistance program be treated as a tax8 able gift. 

9 ‘‘(B) TREATMENT OF DESIGNATION OF

10 NEW BENEFICIARY.—The taxes imposed by 

11 chapters 12 and 13 shall apply to a transfer by 

12 reason of a change in the designated beneficiary 

13 under the program (or a rollover to the account 

14 of a new beneficiary) unless the new beneficiary 

15 is— 

16 ‘‘(i) assigned to the same generation 

17 as (or a higher generation than) the old 

18 beneficiary (determined in accordance with 

19 section 2651), and 

20 ‘‘(ii) a member of the family of the 

21 old beneficiary. 

22 ‘‘(6) ADDITIONAL TAX FOR DISTRIBUTIONS NOT

23 USED FOR QUALIFIED DOWNPAYMENT ASSIST24 ANCE.— 


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1 ‘‘(A) IN GENERAL.—The tax imposed by 

2 this chapter for any taxable year on any tax3 payer who receives a payment or distribution 

4 from a qualified first-time homeowner assist5 ance program which is includible in gross in6 come shall be increased by 10 percent of the 

7 amount which is so includible. 

8 ‘‘(B) EXCEPTIONS.—Subparagraph (A) 

9 shall not apply if the payment or distribution 

10 is— 

11 ‘‘(i) made to a beneficiary (or to the 

12 estate of the designated beneficiary) on or 

13 after the death of the designated bene14 ficiary, 

15 ‘‘(ii) attributable to the designated 

16 beneficiary’s being disabled (within the 

17 meaning of section 72(m)(7)), or 

18 ‘‘(iii) an amount which is includible in 

19 gross income solely by application of para20 graph (2)(C)(i)(II) for the taxable year. 

21 ‘‘(C) CONTRIBUTIONS RETURNED BEFORE

22 CERTAIN DATE.—Subparagraph (A) shall not 

23 apply to the distribution of any contribution 

24 made during a taxable year on behalf of the 

25 designated beneficiary if— 


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1 ‘‘(i) such distribution is made before 

2 the first day of the sixth month of the tax3 able year following the taxable year, and 

4 ‘‘(ii) such distribution is accompanied 

5 by the amount of net income attributable 

6 to such excess contribution. 

7 Any net income described in clause (ii) shall be 

8 included in gross income for the taxable year in 

9 which such excess contribution was made. 

10 ‘‘(e) REPORTS.—Each officer or employee having 

11 control of the qualified distribution under a qualified first12 time homeowner assistance program or their designee 

13 shall make such reports regarding such program to the 

14 Secretary and to designated beneficiaries with respect to 

15 contributions, distributions, and such other matters as the 

16 Secretary may require. The reports required by this sub17 section shall be filed at such time and in such manner 

18 and furnished to such individuals at such time and in such 

19 manner as may be required by the Secretary. 

20 ‘‘(f) REGULATIONS.—Notwithstanding any other pro21 vision of this section, the Secretary shall prescribe such 

22 regulations as may be necessary or appropriate to carry 

23 out the purposes of this section and to prevent abuse of 

24 such purposes, including regulations under chapters 11, 

25 12, and 13 of this title.’’. 


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1 (b) CONFORMING AMENDMENTS.— 

2 (1) TAX ON EXCESS CONTRIBUTIONS.— 

3 (A) IN GENERAL.—Subsection (a) of sec4 tion 4973 of such Code is amended by striking 

5 ‘‘or’’ at the end of paragraph (5), by inserting 

6 ‘‘or’’ at the end of paragraph (6), and by in7 serting after paragraph (6) the following new 

8 paragraph: 

9 ‘‘(7) a first-time homeowner assistance account 

10 (as defined in section 530A),’’. 

11 (B) EXCESS CONTRIBUTION.—Section 

12 4973 of such Code is amended by adding at the 

13 end the following new subsection: 

14 ‘‘(i) EXCESS CONTRIBUTIONS TO FIRST-TIME HOME15 OWNER ASSISTANCE ACCOUNT.—For purposes of this sec16 tion— 

17 ‘‘(1) IN GENERAL.—In the case of a first-time 

18 homeowner assistance account (as defined in section 

19 530A) (within the meaning of section 529A), the 

20 term ‘excess contributions’ means the amount by 

21 which the amount contributed for the taxable year to 

22 such account (other than contributions under section 

23 530A(d)(3)(C)) exceeds the contribution limit under 

24 section 530A(b)(2)(C). 


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1 ‘‘(2) SPECIAL RULE.—For purposes of this sub2 section, any contribution which is distributed out of 

3 the first-time homeowner assistance account (as so 

4 defined) in a distribution to which the last sentence 

5 of section 530A(d)(6)(C) applies shall be treated as 

6 an amount not contributed.’’. 

7 (2) Section 26(b)(2) is amended by striking 

8 ‘‘and’’ at the end of subparagraph (X), by striking 

9 the period at the end of subparagraph (Y) and in10 serting ‘‘, and’’, and by inserting after subparagraph 

11 (Y) the following: 

12 ‘‘(Z) section 530A(d)(3)(A) (relating to ad13 ditional tax on first-time homeowner assistance 

14 account distributions not used for qualified 

15 homeowner assistance).’’. 

16 (3) PENALTY FOR FAILURE TO FILE RE17 PORTS.—Section 6693(a)(2) of such Code is amend18 ed by striking ‘‘and’’ at the end of subparagraph 

19 (E), by striking the period at the end of subpara20 graph (F) and inserting ‘‘, and’’, and by inserting 

21 after subparagraph (F) the following: 

22 ‘‘(G) section 530A(e) (relating to qualified 

23 first-time homeowner assistance program), 

24 and’’. 

25 (4) Section 877A of such Code is amended— 


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1 (A) in subsection (e)(2) by inserting ‘‘a 

2 qualified first-time homeowner assistance pro3 gram (as defined in section 530A),’’ after 

4 ‘‘530),’’, and 

5 (B) in subsection (g)(6) by inserting 

6 ‘‘530A(c)(3),’’ after ‘‘529(c)(3),’’. 

7 (5) Section 4965(c) of such Code is amended by 

8 striking ‘‘or’’ at the end of paragraph (7), by strik9 ing the period at the end of paragraph (8) and in10 serting ‘‘, or’’, and by inserting after paragraph (8) 

11 the following new paragraph: 

12 ‘‘(9) a program described in section 530A.’’. 

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

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

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

‘‘Sec. 530A. Qualified first-time homeowner assistance program.’’. 

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

17 this section shall apply to taxable years beginning after 

18 the date of the enactment of this Act. 

Æ 


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