Did you know first-time homebuyers can now create a tax-free savings account to use toward the purchase of their first home? A first-time homebuyers savings account is a new resource in Alabama exclusively for first-time buyers or those reentering the housing market if you haven’t owned a home in the last 10 years. So, hop on the road to homeownership and begin saving for your dream home! Thankfully, building your savings account is easier than ever through this program. Questions? We’ve answered a few of the basics below.
Frequently Asked Questions
What is a first-time homebuyers savings account?
A savings account for qualifying homebuyers that offers tax savings on the deposits and interest earned.
Who is it for?
First-time or second-chance homebuyers (i.e., any Alabamian who has not owned or purchased, either individually or jointly, a single-family residence during a period of 10 years prior to the date of the purchase of a single-family residence).
Where can I create an account?
Any bank, savings institution, industrial loan association, credit union, or other similar entity authorized to do business and accept deposits in Alabama.
How does it work?
Individuals can deduct up to $5,000 per year from their state gross income for deposits into a first-time/second-chance homebuyer savings account. Couples can deduct up to $10,000 per year. It’s a dollar-for-dollar deduction up to the threshold (i.e., an account holder who deposits $10 into a savings account can deduct $10 from his or her state gross income; joint account holders who deposit $10,500 can deduct $10,000).
What homes are eligible?
Single-family residences in Alabama, including a manufactured home, trailer, mobile home, condominium unit, or cooperative.
If you are interested in learning more or setting up an account, connect with a Baldwin REALTOR® today and start your road to homeownership!