Establishes New Jersey First-Time Home Buyer Savings Account Program; provides gross income tax benefits for certain contributions to and earnings on assets maintained in accounts established under program.

S1756 TR

SENATE, No. 1756

STATE OF NEW JERSEY

222nd LEGISLATURE

�

PRE-FILED FOR INTRODUCTION IN THE 2026 SESSION

Sponsored by:

Senator TROY SINGLETON

District 7 (Burlington)

Senator VIN GOPAL

District 11 (Monmouth)

Co-Sponsored by:

Senators Wimberly, Greenstein and Beach

SYNOPSIS

���� Establishes New Jersey First-Time Home Buyer Savings
Account Program; provides gross income tax benefits for certain contributions
to and earnings on assets maintained in accounts established under program.

CURRENT VERSION OF TEXT

���� As reported by the Senate Community and Urban Affairs
Committee with technical review.

��

An Act

establishing the New Jersey First-Time Home
Buyer Savings Account Program and providing gross income tax benefits

for
certain contributions to and earnings on assets maintained in accounts
established under the program, supplementing Title 55 of the Revised Statutes
and Title 54A of the New Jersey Statutes.

����
Be It
Enacted
by the Senate and General Assembly of
the State of New Jersey:

���� 1.��� As used in sections 1 through
7

of
P.L.�� , c.��� (C.������ ) (pending before the Legislature as this bill):�

���� �Certified first-time home
buyer� means an individual or individuals certified as a first-time home buyer
by the New Jersey Housing and Mortgage Finance Agency in accordance with
section 4 of P.L.��� , c.��� (C.������ ) (pending before the Legislature as
this bill).�

���� �Eligible expenses� means the
down payment and any closing costs enumerated in the qualified home purchase
settlement statement, which shall include but shall not be limited to appraisal
fees, mortgage origination fees, and inspection fees.�

���� �Financial institution� means
a State or federally chartered bank, savings bank, savings and loan
association, credit union, or other entity held out to the public as a place of
deposit of funds or medium of savings or investment that has been approved by
the New Jersey Housing and Mortgage Finance Agency.

���� �First-time home buyer savings
account� means a savings, deposit, investment, or other brokerage account
opened by a certified first-time home buyer with a financial institution that
has entered into an agreement with the New Jersey Housing and Mortgage Finance
Agency in accordance with section 3 of
P.L. , c. (C. ) (pending
before the Legislature as this bill).

���� �Principal residence� means a
qualified residential property actually and continually occupied by the
certified first-time home buyer as the certified first-time home buyer�s
permanent residence, as distinguished from a vacation home, property owned and rented
or offered for rent by the certified first-time home buyer, and other secondary
real property holdings.

���� �Qualified home purchase�
means: the acquisition, by sale, of a qualified residential property located in
this State which is occupied as a certified first-time homebuyer�s principal
residence; or the construction of a new qualified residential property located
in this State paid for by the certified first-time home buyer and occupied as
the certified first-time home buyer�s principal residence.

���� �Qualified residential
property� means: a dwelling house; a condominium unit under the form of real
property ownership provided for under the �Condominium Act,� P.L.1969, c.257
(C.46:8B-1 et seq.); a unit in a cooperative or mutual housing corporation; a
unit in a horizontal property regime under the form of real property ownership
provided under the �Horizontal Property Act,� P.L.1963, c.168 (C.46:8A-1 et
seq.); a unit in a continuing care retirement community; or a manufactured home
that is taxable as real property or that is installed in a mobile home park.

���� 2.��� There is established the
New Jersey First-Time Home Buyer Savings Account Program.

���� The program shall be under the
direction and control of the New Jersey Housing and Mortgage Finance Agency and
shall be administered by the executive director of the agency and any clerical,
technical, and other professional staff as may be designated by the executive
director from among the personnel appointed and employed by the agency.

���� The purpose of the program
shall be to encourage first-time home ownership by providing for the
establishment of first-time home buyer savings accounts and authorizing tax
incentives for earnings on assets maintained in those accounts.

���� To effectuate those purposes,
the agency shall:� make and enter into agreements with financial institutions
capable of establishing and maintaining first-time home buyer savings accounts;
certify first-time home buyers eligible to participate in the program; and
administer and enforce program reporting and compliance requirements.

���� 3.��� The New Jersey Housing
and Mortgage Finance Agency shall enter into an agreement with each financial
institution that expresses to the agency in writing an interest in establishing
and maintaining first-time home buyer savings accounts in accordance with the
program.

���� The agreement shall require
the financial institution entering the agreement to allow a certified
first-time home buyer to open a savings, deposit, investment, or other
brokerage account with the financial institution and designate the account in
its entirety as a first-time home buyer savings account.

���� The agreement shall require
the financial institution entering the agreement to allow a certified
first-time home buyer to contribute cash or other marketable securities to the
account and to transfer to the account assets that may be held in another first-time
home buyer savings account or held in another similar account maintained
through a comparable program in another state or jurisdiction; provided,
however, that the agreement shall include provisions stipulating that:

���� the maximum amount of cash or
other marketable securities that may be contributed to an account for a taxable
year shall not exceed $15,000;

���� the maximum amount of all cash
or other marketable securities that may be contributed to an account for all
taxable years shall not exceed $75,000; and

���� the maximum fair market value
of all assets that may be maintained in an account in any taxable year shall
not exceed $150,000.

���� The agreement shall require
the financial institution entering the agreement to allow a certified
first-time home buyer to make withdrawals and distribute assets maintained in a
first-time home buyer savings account to pay eligible expenses incurred by the
certified first-time home buyer for a qualified home purchase, to make
transfers of assets to another first-time home buyer savings account or to
another similar account maintained through a comparable program in another
state or jurisdiction, and to pay fees charged to the certified first-time home
buyer by the financial institution for the establishment or maintenance of the
account.���

���� The agreement shall require
the financial institution entering the agreement to allow a certified
first-time home buyer to make withdrawals and distribute assets maintained in a
first-time home buyer savings account for any purpose other than to pay
eligible expenses incurred by the certified first-time home buyer for a
qualified home purchase, to make transfers of assets to another first-time home
buyer savings account or to another similar account maintained through a comparable
program in another state or jurisdiction, or to pay fees charged to the certified
first-time home buyer by the financial institution for the establishment or
maintenance of the account; provided, however, that the agreement shall include
provisions stipulating that at the time the account is opened or at any time
prior to the withdrawal or distribution of assets for such purposes the
financial institution shall notify the certified first-time home buyer of the
certified home buyer�s responsibility to report and pay any taxes and penalties
that may be due and required to be paid as a result of the withdrawal or
distribution of account assets for any purpose other than to pay eligible
expenses, to make transfers to another first-time home buyer savings account or
to another similar account, or to pay fees for the establishment or maintenance
of the account.���

���� The agreement shall include a
provision that permits the agency to amend the agreement.�

���� The agreement shall include a
provision establishing the conditions under which the agreement may be
terminated.�

���� 4.��� The New Jersey Housing
and Mortgage Finance Agency shall establish an application process and
prescribe the form and manner through which an individual or individuals
seeking to open a first-time home buyer savings account may individually or
collectively file an application to be certified as a first-time home buyer.

���� The application shall require
the individual or individuals to provide information regarding:

���� the state or jurisdiction in
which the individual or individuals currently reside;

���� the annual income of the
individual or individuals;

���� the home ownership history of
the individual or individuals;

���� the purposes to which the
assets maintained in a first-time home buyer savings account will be used;

���� any home buyer education
course attended or completed by the individual or individuals; and�

���� any other first-time home
buyer savings account or other similar account maintained by the individual or
individuals through the program or through a comparable program in another
state or jurisdiction.

���� The agency shall review each
complete application and shall certify the individual or individuals as a
first-time home buyer if the agency determines that the individual or
individuals:

���� reside in this State or will
reside in this State as a result of a qualified home purchase;

���� has or have annual gross
income of not more than $175,000 in each of the three taxable years immediately
preceding the taxable year in which the application is filed;

���� has not or have not made a
qualified home purchase, owned a principal residence located in this State, or
owned residential property located in another state or jurisdiction that was
actually and continually occupied by the individual or individuals as the individual�s
or individuals� permanent residence in the taxable year or the three taxable
years immediately preceding the taxable year the application is filed;

���� will use assets maintained in
a first-time home buyer savings account to pay eligible expenses incurred by
the certified first-time home buyer for a qualified home purchase;

���� has or have attended or
completed a home buyer education course, that has been approved by the agency,
in the taxable year or the three taxable years immediately preceding the
taxable year the application is filed; and

���� does not or do not maintain
any other first-time home buyer savings account or other similar account
through the program or through a comparable program in another state or
jurisdiction, or does or do maintain another first-time home buyer savings
account or other similar account but will terminate that account within 90 days
of the date the written certification is issued to the individual or
individuals by the agency.

���� The agency shall issue a
written certification to each individual certified as a first-time home buyer
by the agency.� The written certification shall be used by the certified
first-time home buyer to open a first-time home buyer savings account. The written
certification shall not be transferred, sold, or assigned to another person,
and shall not be used to open another first-time home buyer savings account
with the same or another financial institution, unless the individual is or the
individuals are recertified as a first-time home buyer by the agency in
accordance with this section.

���� 5.��� The New Jersey Housing
and Mortgage Finance Agency shall establish a reporting process and prescribe
the form and manner through which a certified first-time home buyer shall
annually report to the agency information regarding a first-time home buyer
savings account.

���� The report shall require the
certified first-time home buyer to provide the agency with information
regarding:

���� the date the account was
opened;

���� the financial institution
through which the account is maintained;

���� the aggregate amount of cash
or other marketable securities deposited to the account during the taxable year
immediately preceding the taxable year in which the report is required to be
filed;

���� the aggregate amount of any assets
transferred to the account from any other financial institution during the
taxable year immediately preceding the taxable year in which the report is
required to be filed;

���� the fair market value of all
assets maintained in the account as of the close of business on the last day of
the taxable year immediately preceding the taxable year in which the report is
required to be filed; and

���� the date, amount, and purpose
of each withdrawal or distribution of assets made from the account during the
taxable year immediately preceding the taxable year in which the report is
required to be filed.

���� The report shall be filed with
the agency on or before March 1 of each taxable year immediately following the
taxable year in which the account was opened and shall be filed on or before
that date each taxable year thereafter until the account is closed and the
report providing information regarding the account during the last taxable year
the account was open is filed with the agency.

���� The agency shall transmit a
copy of each report filed by a certified first-time home buyer to the Director
of the Division of Taxation in the Department of the Treasury within 30 days of
the date the report is filed with the agency.

���� 6.��� The New Jersey Housing
and Mortgage Finance Agency shall impose a penalty on each certified first-time
home buyer who makes a withdrawal or distributes assets maintained in a first-time
home buyer savings account for any purpose other than to pay eligible expenses
incurred by the certified first-time home buyer for a qualified home purchase, to
make transfers of assets to another first-time home buyer savings account or to
another similar account maintained through a comparable program in another
state or jurisdiction, or to pay fees charged to the certified first-time home
buyer by the financial institution for the establishment or maintenance of the
account.

���� The amount of the penalty
imposed pursuant to this section shall be equal to 10 percent of the assets
withdrawn or distributed from the first-time home buyer savings account by the
certified first-time home buyer, and shall be collected by the agency in a
civil action in a summary proceeding pursuant to the "Penalty Enforcement
Law of 1999," P.L.1999, c.274 (C.2A:58-10 et seq.). �The Superior Court
and the municipal court shall have jurisdiction to enforce the provisions of
the "Penalty Enforcement Law of 1999,� P.L.1999, c.274 (C.2A:58-10 et
seq.), in connection with this section. The penalty when recovered by the
agency shall be deposited to the General Fund.

���� The penalty imposed by this
section shall not apply to assets withdrawn or distributed from a first-time
home buyer savings account due to: the death or disability of the certified
first-time home buyer; or the disbursement of assets maintained in the account
pursuant to an order for relief under Title 11 of the United States Bankruptcy
Code or a comparable order under federal, state, or foreign law governing
insolvency.

���� 7.��� Notwithstanding any
provisions of the �Administrative Procedure Act,� P.L.1968, c.410 (C.52:14B-1
et seq.), to the contrary, the New Jersey Housing and Mortgage Finance Agency
may adopt immediately upon filing with the Office of Administrative Law such rules
and regulations as the agency determines to be necessary and appropriate to implement
and administer the program, which rules and regulations shall be effective for
a period not to exceed 360 calendar days following the effective date of
P.L.��� , c. (C. ) (pending
before the Legislature as this bill) and may thereafter be amended, adopted, or
readopted by the agency pursuant to the requirements of P.L.1968, c.410
(C.52:14B-1 et seq.).

�����
8.��� a.� A taxpayer
who is a certified first-time home buyer shall be allowed a credit against the
tax otherwise due for the taxable year under the �New Jersey Gross Income Tax
Act,� N.J.S.54A:1-1 et seq., in an amount equal to five percent of up to
$15,000 of contributions, or up to $7,500 of contributions for a married
individual filing separately, that are made by the taxpayer during the taxable
year to one first-time home buyer savings account.

���� b.��� The credit allowed
pursuant to subsection a. of this section shall not reduce the tax liability
otherwise due for the taxable year under the �New Jersey Gross Income Tax Act,�

N.J.S.54A:1-1 et seq., to an amount less than zero.� The amount of
any unused credit resulting from the limitations of this subsection may be
carried forward, if necessary, to the seven taxable years following the taxable
year for which the credit was allowed.� The form and method of carryforward
shall be as prescribed by the director.

���� c.���� As used in this
section:

���� �Certified first-time home
buyer� and �first-time home buyer savings account� mean the same as those terms
are defined by section 1 of P.L.���� , c.��� (C.������ ) (pending before the
Legislature as this bill).

���� 9.��� a.� Gross income shall
not include earnings on a first-time home buyer savings account until the
earnings are distributed from the account, at which time the amount of the
distribution attributable to earnings on the account and the amount of the
distribution attributable to contributions allowed as a credit pursuant to
section 8 of P.L.� , c.� (C.� ) (pending before the Legislature as this bill)

shall be
included in the gross income of the distributee except as provided in this
section.�

���� b.��� Gross income shall not
include a qualified distribution as defined by subsection c. of this section.

���� c.���� For purposes of this
section:

���� �Qualified distribution� means
a withdrawal or distribution from a first-time home buyer savings account to:

���� pay eligible expenses incurred
by a certified first-time home buyer for a qualified home purchase;

���� make transfers of assets to
another first-time home buyer savings account or to another similar account
maintained through a comparable program in another state or jurisdiction; and

���� pay fees charged to the
certified first-time home buyer by the financial institution for the
establishment or maintenance of the first-time home buyer savings account.���

���� �First-time home buyer savings
account,� �eligible expenses,� �certified first-time home buyer,� �qualified
home purchase,� and �financial institution� mean the same as those terms are
defined by section 1 of P.L.���� , c.��� (C.������ ) (pending before the
Legislature as this bill).���

���� d.��� The portion of a
distribution from a first-time home buyer savings account that is attributable
to earnings and to contributions allowed as a credit pursuant to section 8 of
P.L.� , c.� (C.� ) (pending before the Legislature as this bill) shall be
determined in accordance with rules and regulations prescribed by the
director.��

���� 10.� This act shall take
effect immediately, but sections 1 through 6 shall remain inoperative until the
first day of the seventh month next following the date of enactment and sections
8 and 9 shall apply to taxable years beginning on or after January 1 next
following the date sections 1 through 6 are operative.