What You Need to Know
- Taxpayers could take up to $30,000 in qualified retirement home improvement distributions.
- Eligible taxpayers could take the QRHIDs without paying early distribution penalties or paying income taxes on the distributions.
- A group with roots in the home remodeling industry is seeking support for the bill from the financial services industry.
A group with roots in the home remodeling industry is seeking support from life insurers and other financial services players for H.R. 7676, the Home Modification for Accessibility Act of 2022.
The bill would let retirement savers take penalty-free “qualified retirement home improvement distributions” from IRAs, 401(k) plans, 403(b) plans or 457 plans.
After age 59½, they could take an above-the-line tax deduction in the amount spent on eligible home modifications, whether from retirement savings or other funds.
Eligible clients could use the cash to make a primary residence more secure, safer for older adults, or more accessible for older adults with disabilities without paying federal income taxes on the distributions.
Rep. Charlie Crist, D-Fla., introduced the bill at the request of the Washington-based HomesRenewed Coalition.
What It Means
If H.R. 7676 became law, the new tax deduction could give clients another reason to tap their retirement plans.
But, if the new law was implemented as written and worked as drafters expect, it might help clients maximize the amount of time they can stay in their own homes in their later years and minimize spending on facility-based long-term care services.
Louis Tenenbaum, the founder and CEO of the HomesRenewed Coalition, started out as a home remodeler.