HB 5027 Summary

• Requires the Banking Commissioner to establish a first-time homebuyer savings account program allowing individuals to open dedicated savings accounts with Connecticut banks or credit unions to accumulate funds for down payments and closing costs on their first home purchase in Connecticut.

• Permits account holders to contribute unlimited amounts to first-time homebuyer savings accounts, which must exclusively contain cash and marketable securities, with no administrative fees allowed except bank service fees.

• Allows account holders to deduct up to $5,000 annually ($10,000 for joint filers) in contributions to first-time homebuyer savings accounts from Connecticut state income tax, with deductions available for up to 10 taxable years or until funds are used for eligible costs, whichever is sooner.

• Exempts account holders from a 10% civil penalty on withdrawals if funds are transferred to another first-time homebuyer savings account, withdrawn due to death or disability, or disbursed through bankruptcy proceedings.

• Provides that account holders may deduct all interest earned and investment gains on first-time homebuyer savings accounts from state income tax, and qualified beneficiaries may exclude withdrawals used for eligible home purchase costs from their taxable income.