Tax deduction for first-time home buyers considered

Members of the Revenue Committee heard testimony Feb. 11 on a bill that would offer a tax deduction to qualified savings accounts.

LB372, introduced by Omaha Sen. Joni Craighead, would allow an individual or two individuals jointly to establish a first-time home buyer savings account. All interest or other income attributable to the account would be exempt from state income tax.

Craighead said the bill would provide an opportunity and incentive for people to become homeowners.

“Not only would it create a tax incentive for becoming a first-time home buyer, it also would have existing benefits to the real estate, banking and financial industries in Nebraska,” she said.

Funds in the qualified account could be used to pay eligible costs for the purchase of a single-family residence, including down payment and allowable closing costs. The deduction would apply only to the first $50,000 in the account.

A nonqualified withdrawal from the account would be subject to a 5 percent penalty and recapture of income in the same amount as the withdrawal. Any person who files a false claim to avoid such penalty or to evade taxes would be guilty of a Class I misdemeanor.

Walt Radcliffe, representing the Nebraska Realtors Association, spoke in favor of the bill, saying it would provide a lot of benefit to the state with very minimal costs.

“If you have several hundred or even thousands of homes sold because of [LB372], this would be a great deal,” he said. “It also could do a lot outside of the metropolitan area and cities. It could help people get started in a lot of rural communities where real estate is cheaper.”

No one testified in opposition to the bill and the committee took no immediate action on it.