(TRENTON) - Legislation sponsored by Assembly Democrats Troy Singleton (D-Burlington) and Pamela Lampitt (D-Camden/Burlington) to help first-time home buyers better prepare for the financial obligations that come with purchasing a home was released Monday by an Assembly panel.
"The biggest challenge that most first-time home buyers face is coming up with enough money for a down payment," said Singleton. "This would help residents interested in buying a home save up the funds needed over time so they can comfortably reach their goal of home ownership."
"A first time home buyer may not realize all the costs associated with purchasing a home. There's the down payment, the cost for the appraisal, the inspection and so on," said Lampitt. "This helps first time home buyers prepare financially so that they are not overwhelmed by the process."
The bill (A-4067) would establish the New Jersey First-Time Home Buyer Savings Account Program to encourage first-time home buyers to accumulate savings necessary for home ownership. The bill would authorize tax incentives for earnings on assets maintained in those accounts.
The program would be placed under the direction and control of the New Jersey Housing and Mortgage Finance Agency, and would be administered by the executive director of the agency and any clerical, technical, and other professional staff as may be designated by the executive director.
To effectuate the purposes of the program, the agency would have to:
- make and enter into agreements with financial institutions capable of establishing and maintaining first-time home buyer savings accounts
- certify first-time home buyers eligible to participate in the program;
- and administer and enforce program reporting and compliance requirements.
The bill would provide an exclusion from New Jersey gross income for earnings on assets maintained in a first-time home buyer savings account. Under the bill, gross income would not include earnings on a first-time home buyer savings account until the earnings are distributed from the account, at which time the earnings shall be included in the gross income of the distributee unless the withdrawal or distribution is a qualified distribution from the account to:
- pay eligible expenses incurred by a certified first-time home buyer for a qualified home purchase;
- make transfers of assets to another first-time home buyer savings account or to another similar account maintained through a comparable program in another state or jurisdiction; or
- pay fees charged to the certified first-time home buyer by the financial institution for the establishment or maintenance of the first-time home buyer savings account.
The bill would take effect immediately, but provides for sections of the bill that establish and implement the program to remain inoperative until the first day of the seventh month next following the date of enactment and for the section establishing the gross income tax exclusion to apply to taxable years beginning on or after the date the sections establishing and implementing the program are operative.
The bill was approved by the Assembly Housing and Community Development Committee.