S. 5227

119 S5227 IS: First-Time Home Buyer Empowerment Act
 U.S. Senate
 2026-08-04
 text/xml
 EN
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 II  119th CONGRESS  2d Session  S. 5227  IN THE SENATE OF THE UNITED STATES   August 4, 2026   Mr. Husted  (for himself and  Mr. Bennet ) introduced the following bill; which was read twice and referred to the  Committee on Finance    A BILL
To amend the Internal Revenue Code of 1986 to allow certain distributions from long-term qualified tuition programs for first home purchases, and for other purposes.
1.
Short title
This Act may be cited as the   First-Time Home Buyer Empowerment Act  .
2.
Special rule for certain distributions from long-term qualified tuition programs for first home purchases
(a)
In general
 Section 529(c)(3)  of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph:
(F)
Special rule for certain distributions from long-term qualified tuition programs for first home purchases
(i)
In general
In the case of a distribution from an account of a designated beneficiary which has been maintained under 1 or more qualified tuition programs for the 15-year period ending on the date of such distribution, subparagraph (A) shall not apply to so much of the portion of such distribution which—
(I)
does not exceed the aggregate amount contributed to the program (and earnings attributable thereto) before the 5-year period ending on the date of the distribution, and
(II)
is used, within 60 days of such distribution, for the purchase of a principal residence of a first-time homebuyer who is the designated beneficiary with respect to such account.
(ii)
Limitations
(I)
In general
This subparagraph shall apply only to a distribution from an account of the original designated beneficiary of the account, or any successor designated beneficiary who is of the same or a lower generation than the original designated beneficiary.
(II)
Aggregate limitation
This subparagraph shall not apply to any distribution described in clause (i) to the extent that the aggregate amount of such distributions with respect to the designated beneficiary for the taxable year and all prior taxable years exceeds an amount equal to $35,000, reduced by the aggregate amount of distributions to which subparagraph (E) applies with respect to such designated beneficiary for such taxable year and all prior taxable years.
(iii)
Special rule where delay in acquisition
If any distribution from a qualified tuition program of a designated beneficiary fails to meet the requirements of subparagraph (A) solely by reason of a delay or cancellation of the purchase or construction of the residence, the amount of the distribution may be contributed to a qualified tuition program or ABLE account of such beneficiary, as provided in subclauses (I) and (III), respectively, of subparagraph (C)(i), determined by substituting  120 days  for  60 days  in such subparagraph, except that—
(I)
subparagraph (C)(iii) shall not be applied to such contribution, and
(II)
such amount shall not be taken into account in determining whether subparagraph (C)(iii) applies to any other amount.
(iv)
Recapture of tax benefit
(I)
In general
If subparagraph (A) does not apply to a distribution by reason of this subparagraph and a qualifying event occurs before the close of the 5-year period beginning on the date of the purchase of the principal residence with respect to which such distribution was used, the designated beneficiary’s tax for the taxable year in which such qualifying event occurs shall be increased by an amount, determined under regulations, equal to the tax which (but for this subparagraph) would have been imposed with respect to such distribution, plus interest for the deferral period. The amount of any increase determined under the preceding sentence shall be reduced (but not below zero) by 20 percent for each full year occurring during the period beginning on the date of such purchase and ending on the date of such qualifying event.
(II)
Qualifying event
For purposes of this clause, the term  qualifying event  means, with respect to a distribution to which subparagraph (A) does not apply by reason of this subparagraph, the disposition of the principal residence which the designated beneficiary purchased using such distribution, or the cessation of use of such residence as the principal residence of the designated beneficiary (and, if married, such designated beneficiary’s spouse).
(III)
Deferral period
For purposes of this clause, the term  deferral period  means, with respect to a distribution to which subparagraph (A) does not apply by reason of this subparagraph, the period beginning with the taxable year in which (without regard to this subparagraph) the distribution would have been includible in gross income and ending with the taxable year in which the qualifying event described in subclause (I) occurs.
(IV)
Exceptions
Rules similar to the rules of subparagraphs (A), (B), (C), and (E) of section 36(f)(4) shall apply for purposes of this subparagraph.
(v)
Definitions
For purposes of this subparagraph, the terms  purchase ,  principal residence , and  first-time homebuyer  have the meaning given such terms in section 36(c).
 .
(b)
Coordination with aggregate limitation on special rollovers to Roth IRAs
 Section 529(c)(3)(E)(ii)(II)  of the Internal Revenue Code of 1986 is amended to read as follows:
(II)
Aggregate limitation
This subparagraph shall not apply to any distribution described in clause (i) to the extent that the aggregate amount of such distributions with respect to the designated beneficiary for the taxable year and all prior taxable years exceeds an amount equal to $35,000, reduced by the aggregate amount of distributions to which subparagraph (F) applies with respect to such designated beneficiary for such taxable year and all prior taxable years.
  .
(c)
Effective date
The amendments made by this section shall apply to distributions made in taxable years beginning after the date of the enactment of this Act.