H.R. 7402: Unlocking Homeownership Act

This bill, titled the Unlocking Homeownership Act, amends the Internal Revenue Code to allow individuals to use funds from qualified tuition programs (often referred to as 529 plans) for purchasing their first home. Here’s a breakdown of what this means:

Key Provisions

• Distributions for Home Purchases: The bill allows certain distributions from 529 plans to be used for buying a first home. Individuals can withdraw money from their 529 accounts provided that the funds are used for qualified acquisition costs within 120 days of receiving the distribution.
• Qualified First-Time Homebuyer: A qualified first-time homebuyer is defined as someone (and their spouse) who has not owned a primary residence in the last two years prior to the purchase.
• Definitions: The bill includes specific definitions for terms such as:
  • Principal Residence: The home the buyer will live in as their main residence.
  • Date of Acquisition: The day a binding contract is signed to buy the home or when construction begins.
• Special Rules: If a distribution cannot be used for a home purchase because of delays or cancellations, the funds can be transferred to another qualified tuition program or an ABLE account without penalties. This transfer can take place even if the initial use of the funds failed, and it allows for a longer time frame for transfers.
• Recontribution of Funds: People who withdraw funds for a home purchase can later contribute back to their 529 or ABLE accounts as long as the total does not exceed the amount withdrawn for the first home purchase.

Effective Date

The provisions of this bill would take effect for distributions made after the bill becomes law.

Relevant Companies

• DHI - D.R. Horton, Inc.: As one of the largest homebuilders in the U.S., changes in home purchasing regulations could impact their sales positively by increasing accessibility for first-time buyers.
• NVR - NVR, Inc.: Another major homebuilder that may see increased demand for homes as first-time homebuyers use 529 plan funds for down payments and purchase costs.
• LWSN - Lawson Products, Inc.: If they are involved in home improvement or necessary construction supplies and materials, they may benefit from an increase in home construction resulting from new buyers in the market.