“To amend the Internal Revenue Code of 1986 to allow the establishment of down payment savings accounts.”
No CRS summary available for this bill.
This section establishes an above-the-line tax deduction for cash contributions by an individual age 18 or older—who has not owned a principal residence in the prior three years—to a down payment savings account (DPSA), a trust administered by a bank or approved trustee exclusively for the account beneficiary's qualified down payment expenses (i.e., down payment or closing costs on a first-time homebuyer's principal residence). The annual deduction is limited to the lesser of the individual's earned income or $10,000 ($20,000 for joint returns), phased out for modified adjusted gross income (MAGI) over $150,000 ($236,000 joint) across a $50,000 ($79,000 joint) range; the limits are inflation-adjusted after 2025 (using 2024 as base year, rounded to nearest $100). Distributions are excluded from gross income if used for qualified expenses and includible otherwise, with rules similar to IRAs for rollovers, timing, employer contributions, and community property; no deduction is allowed for dependents.