Bill Summary: HB 5429

• Banking Commissioner must establish a first-time homebuyer savings account program enabling first-time homebuyers to save for down payments and closing costs on Connecticut single-family residences, effective July 1, 2020

• Individuals and joint filers can establish accounts with Connecticut banks or credit unions and designate a qualified beneficiary; accounts may contain only cash and marketable securities with no contribution limits

• Account holders receive state income tax deductions of up to $5,000 annually for single filers or $10,000 for joint filers, allowed for up to 10 taxable years or until funds are used for eligible costs, whichever is sooner

• Withdrawals for non-housing purposes trigger a civil penalty of up to 10% of withdrawn funds; penalties waived if funds transfer to another first-time homebuyer account or withdrawal results from account holder death, disability, or bankruptcy

• Interest earned and investment gains in accounts are excluded from gross income; withdrawals used for eligible housing costs are also excluded from taxable income for the qualified beneficiary