Nebraska Lawmakers Debate Bill Creating Savings Accounts for First-Time Homebuyers

LINCOLN, Neb. (WOWT) - According to the National Association of Realtors, the average first time homebuyer age is 40 years old. The average median home price in Nebraska is about $290,000.

LB938, which has been amended to LB803, aims to make it easier for first-time homebuyers to save up for a home in Nebraska. If passed, the bill would create Nebraska First Time Homebuyer Savings Accounts, making it easier to save for a down payment.

“When Nebraskans buy homes they start to build equity. They start to secure their financial future,” Nebraska State Treasurer Joey Spellerberg told First Alert 6. “Usually that largest purchase is a home in someone’s life. We just think it is a really exciting opportunity for Nebraskans to start saving to put roots in our communities, to grow our communities.”

According to the bill, individual homebuyers can put up to $5,000 in their accounts yearly with a lifetime taxable cap of $25,000. For married couples, that figure jumps to $10,000 with a lifetime taxable cap of $50,000.

“LB938 is about helping first-time home buyers overcome one of the biggest hurdles they face today, coming up with the cash needed upfront to buy a home,” Realtor Brad Fricke told First Alert 6. “... By allowing a tax deduction on contributions and earnings in a First-Time Home Buyer Savings Account, LB938 encourages people to plan ahead, save intentionally, and prepare themselves to buy a home.”

Contributions would be fully tax deductible from income tax. Interest and earnings could grow state tax free when used for related expenses.

Expenses include a down payment, closing costs, inspection fees, appraisals, and more. Funds can remain in the account forever without penalty or recapture as long as eligibility requirements are met.

“We really modeled this after the Kansas model. Really, it’s just allowing for more savings,” Spellerberg said. “This is one area that all Nebraskans can agree on is that home ownership is important. We want first time home buyers to purchase homes in Nebraska and we want to be able to create that environment to be successful in our state.”

To qualify you have to be a first time homebuyer — meaning you have never owned a home or have not been on a title for at least three years following a divorce.

“This is not a silver bullet, this is kind of encouraged savings in an account to help contribute to the down payment, closing cost, to contribute to building a home,” Spellerberg said. “These accounts can encourage grandparents contributing for grandkids, there are multiple ways to help get your child, grandchild or young married couple off to a great start.”

A similar bill, LB151 attempted the same goal last legislative session but failed to make it out of committee. The current bill is in its final editing stage and could be up for debate as early as Thursday.

“There is no downside to tax deductible saving and encouraging home ownership,” Fricke said.

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