New legislation, the Save for Success Act, would allow first-time homebuyers to tap 529 plans to purchase a home.
The bill, H.R. 7393, introduced by Reps. Jimmy Patronis and Gus Bilirakis, both Florida Republicans, would allow distributions from these plans — formally known as qualified tuition programs — to be used for qualified housing expenses for first-time homebuyers.
"For too many young families, saving for a first home feels further out of reach every year," Patronis said in a statement. "The Save for Success Act makes it more affordable for first-time homebuyers to purchase their first home by giving them greater flexibility to use the savings they have already set aside."
The bill would amend the Internal Revenue Code of 1986 by adding "qualified housing expenses" as costs paid by a first-time homebuyer to purchase a principal residence, including closing costs and mortgage payments.
"A first-time homebuyer is someone who, along with their spouse if married, did not own a principal residence at any time during the three years before the purchase," the bill states. "The term 'principal residence' follows the existing federal tax definition, and 'purchase' is defined under current tax law."
The change would apply to eligible distributions made after Dec. 31, 2026.
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