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HOUSE DOCKET, NO. 2672 FILED ON: 1/19/2023
HOUSE . . . . . . . . . . . . . . . No. 2727
The Commonwealth of Massachusetts
_________________
PRESENTED BY:
Daniel R. Carey and Dylan A. Fernandes
_________________
To the Honorable Senate and House of Representatives of the Commonwealth of Massachusetts in General
Court assembled:
The undersigned legislators and/or citizens respectfully petition for the adoption of the accompanying bill:
An Act encouraging home ownership by establishing a first time home buyers savings account.
_______________
PETITION OF:
NAME:DISTRICT/ADDRESS :DATE ADDED:Daniel R. Carey2nd Hampshire1/19/2023Dylan A. FernandesBarnstable, Dukes and Nantucket1/19/2023 1 of 8
HOUSE DOCKET, NO. 2672 FILED ON: 1/19/2023
HOUSE . . . . . . . . . . . . . . . No. 2727
By Representatives Carey of Easthampton and Fernandes of Falmouth, a petition (accompanied
by bill, House, No. 2727) of Daniel R. Carey and Dylan A. Fernandes relative to the
establishment of first-time homebuyer savings accounts and providing for an income tax
deduction for certain amounts contributed to such accounts. Revenue.
The Commonwealth of Massachusetts
_______________
In the One Hundred and Ninety-Third General Court
(2023-2024)
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An Act encouraging home ownership by establishing a first time home buyers savings account.
Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority
of the same, as follows:
1 SECTION 1. Chapter 62 of the General Laws is hereby amended by inserting after
2section 5C the following new section:-
3 Section 5D. Definitions applicable to this section and section 5E.
4 The following words and phrases for the purposes of this sections and the following
5section shall have the following meanings:
6 “Account holder” means an individual who establishes, individually or jointly with one
7or more other individuals, a first-time homebuyer savings account.
8 “Allowable closing costs” means a disbursement listed on a settlement statement for the
9purchase of a single-family residence in Massachusetts by a qualified beneficiary. 2 of 8
10 “Eligible costs” means the down payment and allowable closing costs for the purchase of
11a single-family residence in Massachusetts by a qualified beneficiary.
12 “Financial institution” means any bank, trust company, savings institution, industrial loan
13association, consumer finance company, credit union, or any benefit association, insurance
14company, safe deposit company, money market mutual fund, or similar entity authorized to do
15business in Massachusetts.
16 “First-Time Homebuyer” means an individual who resides in Massachusetts and has not
17owned or purchased, either individually or jointly, a single-family residence during a period of
18three (3) years prior to the date of the purchase of a single-family residence.
19 “First-Time Home Buyer Savings Account” or “account” means an account with a
20financial institution that an account holder designates as a first-time home buyer savings account
21on the account holder’s Massachusetts income tax return for tax year 2024 or any tax year
22thereafter, pursuant to this Chapter for the purpose of paying or reimbursing eligible costs for the
23purchase of a single-family residence in Massachusetts by a qualified beneficiary.
24 “Qualified Beneficiary” means a first-time home buyer who is designated as the qualified
25beneficiary of an account designated by the account holder as a first-time home buyer savings
26account.
27 “Settlement Statement” means the statement of receipts and disbursements for a
28transaction related to real estate, including a statement prescribed under the Real Estate
29Settlement Procedures Act of 1974, 12 U.S.C. 2601 et seq., as amended, and regulations
30thereunder. 3 of 8
31 “Single-Family Residence” means a single-family residence owned and occupied by a
32qualified beneficiary as the qualified beneficiary’s principal residence, which may include a
33manufactured home, trailer, mobile home, condominium unit, or cooperative.
34 SECTION 2. Chapter 62 is hereby amended by inserting after section 5D the following
35new section:-
36 Section 5E. Designation and Use of First-Time Home Buyer Savings Account.
37 (a) Beginning January 1, 2024, any individual may open an account with a financial
38institution and designate the account, in its entirety, as a first-time home buyer savings account
39to be used to pay or reimburse a qualified beneficiary’s eligible costs for the purchase of a
40single-family residence in Massachusetts.
41 (b) An account holder must designate no later than April 15 of the year following the tax
42year during which the account is established, a first-time home buyer as the qualified beneficiary
43of the first-time home buyer savings account. The account holder may designate himself or
44herself as the qualified beneficiary and may change the designated qualified beneficiary at any
45time, but there may not be more than one qualified beneficiary at any one time.
46 (c) An individual may jointly own a first-time home buyer savings account with another
47person if the joint account holders file a joint income tax return.
48 (d) An individual may be the account holder of more than one first-time home buyer
49savings account. However, an account holder cannot have multiple accounts that designate the
50same qualified beneficiary. 4 of 8
51 (e) An individual may be designated as the qualified beneficiary on more than one first-
52time home buyer savings account.
53 (f) Only cash and marketable securities may be contributed to a first-time home buyer
54savings account. Subject to the limitations of this section, persons other than the account holder
55may contribute funds to a first-time home buyer savings account. There is no limitation on the
56amount of contributions that may be made to or retained in a first-time home buyer savings
57account.
58 (g) The funds held in a first-time home buyer savings account shall not be used to pay
59expenses of administering the account, except that a service fee may be deducted from the
60account by a financial institution in which the account is held;
61 (h) The account holder shall submit the following to the department of revenue:
62 (1) detailed information regarding the first-time home buyer savings account, including a
63list of transactions for the account during the tax year and the Form 1099 issued by the financial
64institution for such account with the account holder’s Massachusetts income tax return on forms
65prepared by the department of revenue; and
66 (2) a detailed account of the eligible costs toward which the account funds were applied,
67if there was a withdrawal from the account, and a statement of the amount of funds remaining in
68the account, if any.
69 (i)Under this section and section 5D of this chapter, a financial institution shall not be
70required to: 5 of 8
71 (1) Designate an account as a first-time home buyer savings account, or designate the
72qualified beneficiaries of an account, in the financial institution’s account contracts or systems or
73in any other way;
74 (2) Track the use of funds withdrawn from a first-time home buyer savings account;
75 (3) Allocate funds in a first-time home buyer savings account among joint account
76holders or multiple qualified beneficiaries; or
77 (4) Report any information to the Department of Revenue or any other governmental
78agency that is not otherwise required by law.
79 (j)A financial institution is not responsible or liable for:
80 (1) Determining or ensuring that an account satisfies the requirements to be a first-time
81home buyer savings account;
82 (2) Determining or ensuring that funds in a first-time home buyer savings account are
83used for eligible costs; or
84 (3) Reporting or remitting taxes or penalties related to the use of a first-time home buyer
85savings account.
86 (k) Except as otherwise provided in this section and subject to the limitations under this
87subsection, there shall be deducted from taxable income of an account holder, for Massachusetts
88income tax purposes: 6 of 8
89 (1) the amount contributed to a first-time home buyer savings account during each tax
90year, not to exceed $5,000 for an account holder who files an individual tax return or $10,000 for
91joint account holders who file a joint tax return.
92 (2) the amount of earnings, including interest and other income on the principal, from the
93first-time home buyer savings account during the tax year.
94 (l) An account holder may claim the deduction and exclusion under subsection (k):
95 (1) For a period not to exceed 15 years;
96 (2) For an aggregate total amount of principal and earnings, not to exceed $50,000 during
97that 15-year period; and
98 (3) Only if the principal and earnings of the account remain in the account until a
99withdrawal is made for eligible costs related to the purchase of a single-family residence by a
100qualified beneficiary, except as otherwise provided in this section.
101 (m) Any funds in a first-time home buyer savings account not expended on eligible costs
102by December 31 of the last year of the 15-year period under Subsection 7(2)(a) of this Chapter
103shall thereafter be included in the account holder’s taxable income.
104 (n) A person other than the account holder who deposits funds in a first-time home buyer
105savings account shall not be entitled to the deduction and exclusion provided for under this
106Chapter.
107 (o) The deduction and exclusion from taxable income provided for by this Section shall
108apply to any alternative bases for calculating taxable income for Massachusetts income tax
109purposes. 7 of 8
110 (p) Except as otherwise authorized in this of this section, if the account holder withdraws
111any funds from a first-time home buyer savings account for a purpose other than eligible costs
112for the purchase of a single-family residence:
113 (1) Those funds shall be included in the account holder’s taxable income; and
114 (2) The account holder shall pay a penalty to the Department of Revenue equal to the tax
115that would have been collected had the withdrawn funds been subject to income tax. Such
116penalty shall not apply to funds withdrawn from an account that were:
117 (i) Withdrawn by reason of the account holder’s death or disability;
118 (ii) A disbursement of assets of the account pursuant to a filing for protection under the
119United States Bankruptcy Code, 11 U.S.C. § 101 et seq.; or
120 (iii) A transfer of the funds from a first-time home buyer savings account to a new first-
121time home buyer savings account held by a different financial institution or the same financial
122institution.
123 (q) The Department of Revenue shall prepare forms for:
124 (1) The designation of an account with a financial institution to serve as a first-time home
125buyer savings account;
126 (2) The designation of a qualified beneficiary of a first-time home buyer savings account;
127and
128 (3) For an account holder to annually submit to the Department of Revenue detailed
129information regarding the first-time home buyer savings account, including but not limited to a 8 of 8
130list of transactions for the account during the tax year, and identifying any supporting
131documentation that is required to be maintained by the account holder.