H.R. 7756

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 7756 Introduced in House (IH)]

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119th CONGRESS
2d Session
H. R. 7756

To amend the Internal Revenue Code of 1986 to establish tax-advantaged 
homeowner savings accounts.

_______________________________________________________________________

IN THE HOUSE OF REPRESENTATIVES

March 3, 2026

Mr. Barrett 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 establish tax-advantaged 
homeowner savings accounts.

Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the ``First-time Homebuyer Savings Account 
Act of 2026''.

SEC. 2. HOMEOWNER SAVINGS ACCOUNT.

(a) In General.--Part VII of subchapter B of chapter 1 of subtitle 
A of the Internal Revenue Code of 1986 is amended by inserting after 
section 225 the following new section:

``SEC. 225A. HOMEOWNER SAVINGS ACCOUNT.

``(a) Deduction Allowed.--In the case of an eligible individual, 
there shall be allowed as a deduction for the taxable year an amount 
equal to the aggregate amount paid in cash during such taxable year by 
or on behalf of such individual to a homeowner savings account of such 
individual.
``(b) Definitions.--For purposes of this section--
``(1) Homeowner savings account.--The term `homeowner 
savings account' means a trust created or organized in the 
United States as a homeowner savings account exclusively for 
the purpose of paying qualified homeowner expenses of the 
account beneficiary, but only if the written governing 
instrument creating the trust meets the following requirements:
``(A) Except in the case of a rollover 
contribution, no contribution will be accepted--
``(i) unless it is in cash,
``(ii) to the extent such contribution, 
when added to previous contributions to the 
trust for the calendar year, exceeds the amount 
in effect for the calendar year under 
subparagraph (A) of section 219(b)(5) 
(determined without regard to subparagraph (B) 
thereof), and
``(iii) to the extent that after such 
contribution the amount held in the account 
would exceed an amount equal to 20 percent of 
the amount published under paragraph (6) for 
the year in which the contribution is made.
``(B) The trustee is a bank (as defined in section 
408(n)), an insurance company (as defined in section 
816), or another person who demonstrates to the 
satisfaction of the Secretary that the manner in which 
such person will administer the trust will be 
consistent with the requirements of this section.
``(C) No part of the trust assets will be invested 
in life insurance contracts.
``(D) The assets of the trust will not be 
commingled with other property except in a common trust 
fund or common investment fund.
``(E) The interest of an individual in the balance 
in his account is nonforfeitable.
``(2) Eligible individual.--The term `eligible individual' 
means an individual if such individual (and, if married, such 
individual's spouse) had no present ownership interest in a 
principal residence during the 3-year period ending on the 
present date.
``(3) Qualified homeowner expenses.--The term `qualified 
homeowner expenses' means amounts paid or incurred to--
``(A) purchase or construct the principal residence 
of the individual if such individual had no present 
ownership interest in a principal residence during the 
3-year period ending on the date of the purchase or 
beginning of construction of the principal residence, 
or
``(B) make alterations, repairs, or improvements 
which meet the requirements of section 143(k)(4) 
(determined without regard to the dollar limitation 
provided in such section) to such principal residence 
so purchased or constructed.
``(4) Account beneficiary.--The term `account beneficiary' 
means the individual on whose behalf the homeowner savings 
account was established.
``(5) Principal residence.--The term `principle residence' 
has the same meaning as when used in section 121.
``(6) Publication of national average single family home 
price.--The Secretary of the Treasury shall, not later than 
December 31 of each calendar year, publish the estimated 
national average price of a single family home for the 
following calendar year.
``(7) Rollover contribution.--The term `rollover 
contribution' means an amount paid or distributed from a 
homeowner savings account to the account beneficiary to the 
extent that--
``(A) the amount received is paid into a homeowner 
savings account for the benefit of such beneficiary not 
later than the 60th day after the day on which the 
beneficiary receives the payment or distribution, and
``(B) such account beneficiary did not receive any 
other amount described in subparagraph (A) from a 
homeowner savings account which was not includible in 
the individual's gross income because of subsection 
(d)(2)(B) during the 1-year period ending on the date 
of such receipt.
``(c) Treatment of Contributions.--
``(1) Contribution limit.--The aggregate amount of 
contributions for any taxable year to all homeowner savings 
accounts maintained for the benefit of an individual shall not 
exceed the lesser of--
``(A) the amount in effect for the taxable year in 
which such contributions are made under subparagraph 
(A) of section 219(b)(5) (determined without regard to 
subparagraph (B) thereof),
``(B) an amount equal to the compensation 
includible in the individual's gross income for such 
taxable year, or
``(C) the amount that would result in the amount 
held in the account exceeding an amount equal to 20 
percent of the amount published under subsection (b)(6) 
for the year in which the contribution is made.
``(2) Limitation based on modified adjusted gross income.--
The amount determined under paragraph (1)(A) for any taxable 
year shall be reduced (but not below zero) by the amount which 
bears the same ratio to such amount as--
``(A) the excess of--
``(i) the taxpayer's adjusted gross income 
for such taxable year, over
``(ii) the applicable dollar amount (as 
defined in section 219(g)(3)(B), determined 
after the application of section 219(g)(8)), 
bears to
``(B) $10,000 ($20,000 in the case of a joint 
return or a married individual filing a separate 
return).
The rules of subparagraphs (B) and (C) of section 219(g)(2) 
shall apply to any reduction under this paragraph.
``(3) Spousal contribution.--
``(A) In general.--In the case of an individual to 
whom this paragraph applies for the taxable year, the 
limitation of paragraph (1) shall be equal to the 
lesser of--
``(i) the compensation includible in such 
individual's gross income for the taxable year, 
plus
``(ii) the compensation includible in the 
gross income of such individual's spouse for 
the taxable year reduced by the amount allowed 
as a deduction under subsection (a) to such 
spouse for such taxable year.
``(B) Individual to whom subparagraph (a) 
applies.--Subparagraph (A) shall apply to any 
individual if--
``(i) such individual files a joint return 
for the taxable year, and
``(ii) the amount of compensation (if any) 
includible in such individual's gross income 
for the taxable year is less than the 
compensation includible in the gross income of 
such individual's spouse for the taxable year.
``(d) Treatment of Distributions.--
``(1) Amounts used for qualified homeowner expenses.--Any 
amount paid or distributed out of a homeowner savings account 
which is used exclusively to pay qualified homeowner expenses 
shall not be includible in gross income.
``(2) Inclusion of amounts not used for qualified homeowner 
expenses.--Any amount paid or distributed out of a homeowner 
savings account which is not--
``(A) used exclusively to pay the qualified 
homeowner expenses of the account beneficiary,
``(B) an exempted distribution, or
``(C) a rollover contribution,
shall be included in the gross income of such beneficiary and 
the amount of any tax imposed by this chapter shall be 
increased by 10 percent on any amount so includible.
``(3) Exempted distribution.--For purposes of this 
subsection, the term `exempted distribution' means an amount 
paid or distributed out of a homeowner savings account by 
reason of--
``(A) an emergency, including--
``(i) the loss of a job or major source of 
income, or
``(ii) a major health event leading to 
substantial medical expenses,
``(B) a life event, including--
``(i) acquiring a present ownership 
interest in a principal residence by reason of 
marriage,
``(ii) death of the account beneficiary, or
``(iii) the account beneficiary residing 
outside the United States, or
``(C) such other circumstances as the Secretary 
determines appropriate by regulation.
``(4) Excess contributions returns before due date of 
return.--
``(A) In general.--If any excess contribution is 
contributed for a taxable year to any homeowner savings 
account of an individual, paragraph (2) shall not apply 
to distributions from the homeowner savings accounts of 
such individual (to the extent such distributions do 
not exceed the aggregate excess contributions to all 
such accounts of such individual for such year) if--
``(i) such distribution is received by the 
individual on or before the last day prescribed 
by law (including extensions of time) for 
filing such individual's return for such 
taxable year, and
``(ii) such distribution is accompanied by 
the amount of net income attributable to such 
excess contribution.
Any net income described in clause (ii) shall be 
included in the gross income of the individual for the 
taxable year in which it is received.
``(B) Excess contribution defined.--For purposes of 
subparagraph (A), the term `excess contribution' means 
any contribution (other than a rollover contribution) 
which is not excludable from gross income under this 
section.
``(e) Tax Treatment of Accounts.--
``(1) In general.--A homeowner savings account is exempt 
from taxation under this subtitle unless such account has 
ceased to be a homeowner savings account. Notwithstanding the 
preceding sentence, any such account is subject to the taxes 
imposed by section 511 (relating to imposition of tax on 
unrelated business income of charitable, etc. organizations).
``(2) Account termination.--Rules similar to the rules of 
paragraphs (2) and (4) of section 408(e) shall apply to 
homeowner savings accounts, and any amount treated as 
distributed under such rules shall be treated as not used to 
pay qualified homeowner expenses.
``(f) Custodial Account.--For purposes of this section, a custodial 
account shall be treated as a trust if the assets of such account are 
held by a bank (as defined in section 408(n)) or another person who 
demonstrates, to the satisfaction of the Secretary, that the manner in 
which he will administer the account will be consistent with the 
requirements of this section, and if the custodial account would, 
except for the fact that it is not a trust, constitute an account 
described in subsection (b)(1). For purposes of this title, in the case 
of a custodial account treated as a trust by reason of the preceding 
sentence, the custodian of such account shall be treated as the trustee 
thereof.''.
(b) Tax on Excess Contributions.--
(1) In general.--Section 4973(a) of such Code is amended--
(A) in paragraph (5), by striking ``or'',
(B) in paragraph (6), by inserting ``or'' after the 
comma, and
(C) by inserting after paragraph (6) the following 
new paragraph:
``(7) a homeowner savings account (within the meaning of 
section 225A(b)(1)),''.
(2) Definition of excess contribution in 4973.--Section 
4973 of such Code is amended by adding at the end the following 
new subsection:
``(i) Excess Contributions to Homeowner Savings Account.--For 
purposes of this section, in the case of a homeowner savings account 
(within the meaning of section 225A(b)(1)), the term `excess 
contribution' means the amount by which the amount contributed for the 
taxable year to such account exceeds the contribution limit under 
225A(c)(1).''.
(c) Clerical Amendment.--The table of sections for part VII of 
subchapter B of chapter 1 of subtitle A of such Code is amended by 
inserting after the item relating to section 225 the following new 
item:

``Sec. 225A. Homeowner savings account.''.
(d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.
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