The New Jersey Senate Community and Urban Affairs Committee has advanced legislation aimed at helping residents save for their first home by offering state income tax incentives. Sponsored by Senators Troy Singleton and Vin Gopal, the bill would establish the New Jersey First-Time Home Buyer Savings Account Program.
The proposal, designated as Bill S-1391, would authorize the New Jersey Housing and Mortgage Finance Agency (NJHMFA) to certify eligible first-time homebuyers and work with financial institutions to create dedicated savings accounts. Account holders could contribute up to $15,000 per year, with a lifetime contribution cap of $75,000 and a maximum total account balance of $150,000.
Participants would be eligible for a 5% state income tax credit on their annual contributions and would be exempt from paying taxes on interest earned, provided the funds are used for qualifying home purchase expenses. Non-qualified withdrawals would be subject to a 10% penalty, with exceptions for hardship cases such as death or disability.
To qualify, individuals must earn less than $175,000 annually, have no recent history of homeownership, and complete a homebuyer education course. The program includes annual reporting requirements to ensure funds are used appropriately.
The legislation is modeled after similar initiatives in other states, including Colorado and Virginia, and is intended to address barriers to homeownership faced by younger and lower-income residents. The National Association of Realtors reports that first-time homebuyers currently make up just 24% of home purchases, a significant decline from the historic average of 40%.