An Act providing for the establishment of first-time homebuyer savings accounts for first-time homebuyers in this Commonwealth; establishing the First-time Homebuyer Savings Account Program and the First-time Homebuyer Savings Account Fund; and imposing duties on the Treasury Department.

PRINTER'S NO. 851
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No. 803
Session of
2025
INTRODUCED BY BROWN, PICOZZI, COMITTA, ARGALL, FONTANA, HAYWOOD,
KANE AND STEFANO, MAY 30, 2025
REFERRED TO URBAN AFFAIRS AND HOUSING, MAY 30, 2025
AN ACT
Providing for the establishment of first-time homebuyer savings
accounts for first-time homebuyers in this Commonwealth;
establishing the First-time Homebuyer Savings Account Program
and the First-time Homebuyer Savings Account Fund; and
imposing duties on the Treasury Department.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Short title.
This act shall be known and may be cited as the First-Time
Homebuyer Savings Account Act.
Section 2. Definitions.
The following words and phrases when used in this act shall
have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Account." A first-time homebuyer savings account
established under section 5.
"Account holder." An individual who is a first-time
homebuyer and establishes, individually or jointly, an account.
"Allowable closing costs." A disbursement listed on a
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settlement statement for the purchase of a single-family
residence in this Commonwealth by a qualified beneficiary.
"Department." The Treasury Department of the Commonwealth.
"Eligible costs." A down payment and allowable closing costs
for the purchase of a single-family residence in this
Commonwealth by a qualified beneficiary. The term does not
include costs incurred prior to the establishment of an account.
"Financial institution." A bank, trust company, savings
institution, credit union, broker-dealer, insurance company or
mutual fund or similar entity authorized to do business in this
Commonwealth.
"First-time homebuyer." An individual who resides in this
Commonwealth and has not owned or purchased directly or through
a trust, limited liability company, partnership or other legal
entity, either individually or jointly, a single-family
residence in this Commonwealth or another state.
"Fund." The First-time Homebuyer Savings Account Fund
established under section 4(c).
"Program." The First-time Homebuyer Savings Account Program
established under section 4.
"Qualified beneficiary." A first-time homebuyer who is
designated as a qualified beneficiary by the account holder of
an account.
"Settlement statement." A statement of receipts and
disbursements from a real estate transaction, including a
statement prescribed under 12 U.S.C. Ch. 27 (relating to real
estate settlement procedures).
"Single-family residence." A single-family residence owned
and occupied by a qualified beneficiary as the qualified
beneficiary's principal residence, which may include a
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manufactured home, trailer, mobile home or unit in a
condominium, cooperative or planned community.
"Tax Reform Code of 1971." The act of March 4, 1971 (P.L.6,
No.2), known as the Tax Reform Code of 1971.
Section 3. First-time Homebuyer Savings Account Bureau.
The First-time Homebuyer Savings Account Bureau is
established within the department for the purpose of
administering the program.
Section 4. First-time Homebuyer Savings Account Program.
(a) Establishment.--The First-time Homebuyer Savings Account
Program is established in the department.
(b) Application.--The application for the program shall be
on a form and in a manner prescribed by the department which
shall be available on the department's publicly accessible
Internet website.
(c) Administration.--The department may utilize the
administrative and investment structures of the Tuition Account
Investment Program established by the act of April 3, 1992
(P.L.28, No.11), known as the Tuition Account Programs and
College Savings Bond Act, or the Pennsylvania ABLE Savings
Program established by the act of April 18, 2016 (P.L.128,
No.17), known as the Pennsylvania ABLE Act, without separately
soliciting proposals for assistance in the management of all or
part of the program.
(d) Investment manager, program manager and trustee.--The
department may contract with one or more persons or legal
entities to serve as investment managers, program managers and
trustees on behalf of the program. If the department contracts
with investment managers, program managers or trustees to
fulfill the objectives of the program, the investment managers,
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program managers and trustees shall work with the department to
provide a program to develop investment portfolios and to
supervise investments and investment programs.
(e) Powers and duties of department.--The department shall
have the powers necessary or convenient to carry out this act,
including the power to:
(1) Administer the program and the fund, including the
use of investment managers, program managers and trustees to
assist in establishing and administering the program and
fund.
(2) Enter into contracts with individuals for the
establishment of accounts.
(3) Contract for goods and services, and engage and
employ personnel, including, but not limited to, the services
of private consultants, actuaries, managers, legal counsel
and auditors for rendering professional, managerial and
technical assistance and advice.
(4) Charge and collect administrative fees and charges
in connection with any transaction, including continued
participation in the program.
(5) Close an account and return any balance in the
account, minus any fee, to the account holder.
(6) Contract for insurance, letters of credit and
collateral agreements.
(7) Adjust the terms of contracts with account holders.
(8) Promulgate regulations to implement this act.
(9) Take other action necessary to carry out the purpose
of this act and incidental to the duties imposed on the
department.
(f) Fund.--
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(1) The First-time Homebuyer Savings Account Fund is
established in the State Treasury.
(2) The fund shall consist of:
(i) All contributions made by account holders and
all interest, earnings and additions thereto.
(ii) Any other money, public or private,
appropriated or made available to the department for the
fund from any source and all interest, earnings and
additions thereto.
(3) The department shall annually submit to the General
Assembly a budget request outlining the operating and
administrative expenses of the program.
(4) Assets of the fund shall be preserved, invested and
expended solely for the purposes specified in this act.
(5) The department shall repay from the fees, charges
and investment earnings of the fund to the General Fund any
money appropriated for the initial planning, organization and
administration of the program. The repayment shall occur when
there are enough assets sufficient to defray the costs of the
program, as determined by the department.
(6) The department may not pledge the credit or taxing
powers of the Commonwealth. Any obligation or debt under this
section shall not be deemed an obligation or debt of the
Commonwealth, nor shall the Commonwealth be liable to pay
principal and interest on obligations or to offset any loss
of principal and interest earnings on investments made by the
department.
(7) The policies governing the investment of the fund
shall be directed to obtaining sufficient income to meet the
fund's obligations under this act, maintaining necessary
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reserves and covering operating expenses. The policies
governing the fund shall be directed to providing for an
appropriate balance of risk, liquidity and return
commensurate with the management of a prudent investor. The
department, its investment managers, program managers and
trustees shall have the authority to invest and reinvest
money in the fund in all lawful investments.
Section 5. First-time homebuyers savings account.
(a) Approval.--Upon approval from the department into the
program, an individual may establish a first-time homebuyer
savings account.
(b) Designation and change of qualified beneficiary.--
(1) An account holder shall designate no more than one
first-time homebuyer as the qualified beneficiary of the
account. The account holder may, at any time, designate the
account holder as the qualified beneficiary or change the
designated qualified beneficiary.
(2) The account holder must designate an individual as
the qualified beneficiary under paragraph (1) by certifying
that the qualified beneficiary is eligible under this act in
a form and manner determined by the department.
(3) If the qualified beneficiary becomes ineligible
under this act, the account holder must notify the department
in a form and manner determined by the department and change
the designated qualified beneficiary. If the account holder
fails to change the designated qualified beneficiary under
this paragraph, the department shall close the account and
distribute the money in the account to the account holder
under section 8.
(c) Use of account.--Money from an account may only be used
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to pay or reimburse a qualified beneficiary's eligible costs for
the purchase of a single-family residence in this Commonwealth.
(d) Joint account holders.--An account holder may jointly
own an account with another individual if the joint account
holders file a joint personal income tax return under Article
III of the Tax Reform Code of 1971.
(e) Qualified beneficiary of more than one account.--An
individual may be designated as the qualified beneficiary on
more than one account.
(f) Contributions to account.--
(1) Subject to the limitations under section 6(d), an
individual other than the account holder may contribute to an
account.
(2) The maximum amount of all contributions to an
account shall be $150,000.
Section 6. Deduction and exclusion from taxable income.
(a) Deduction of contributions.--Except as otherwise
provided under subsection (c), the amount contributed by an
account holder to an account during each tax year:
(1) May not exceed $5,000 for an account holder who
files an individual personal income tax return or $10,000 for
joint account holders who file a joint personal income tax
return.
(2) Shall be deductible, up to the contribution limits
under paragraph (1), from the taxable income of the account
holder under Article III of the Tax Reform Code of 1971
during the tax year the contribution was made.
(b) Exclusion of earnings.--Except as otherwise provided
under subsection (c), the amount of earnings on an account
during the tax year may be excluded from the taxable income of
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an account holder under Article III of the Tax Reform Code of
1971.
(c) Limitations on deductions and exclusions.--An account
holder may claim a deduction and exclusion under this section:
(1) For a period of no more than 10 years.
(2) For an aggregate amount of principal not to exceed
$50,000 within 10 years.
(3) If the principal and earnings of an account remain
in the account until a withdrawal is made for the eligible
costs relating to the purchase of a single-family residence
by a qualified beneficiary.
(d) Nonaccount holders.--An individual other than the
account holder who deposits money into an account under section
5(f) is not entitled to the deduction and exclusion provided for
under this section.
(e) Remaining money.--Money in an account not expended on
eligible costs before expiration of the 10-year period under
subsection (c)(1) shall be included in the account holder's
taxable income as interest under Article III of the Tax Reform
Code of 1971.
Section 7. Distribution of money.
Upon proof of the death of an account holder, a financial
institution shall distribute the account in accordance with the
contract terms governing the account.
Section 8. Withdrawal for purpose other than eligible costs.
If an account holder or qualified beneficiary withdraws any
amount from an account and uses the withdrawal for a purpose
other than eligible costs:
(1) The entire amount withdrawn shall be included in the
account holder's taxable income as interest income under
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Article III of the Tax Reform Code of 1971 for the tax year
the withdrawal was made.
(2) The account holder or qualified beneficiary shall
pay to the department a penalty equal to 10% of the amount
withdrawn, which penalty may be deducted by the department
from the balance of the account. The penalty may not apply
to:
(i) a withdrawal from the account by reason of the
account holder's or the qualified beneficiary's death or
disability; or
(ii) a disbursement of assets of the account
pursuant to a filing for protection under 11 U.S.C.
(relating to bankruptcy).
Section 9. Effective date.
This act shall take effect in 180 days.
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