New Jersey Lawmakers Advance Plan to Assist First-Time Home Buyers

As young Americans believe homeownership is slipping out of reach, New Jersey legislators are attempting to lower barriers to help first-time homebuyers save for a down payment.

A bill, S1756, sponsored by Sen. Troy Singleton, a Democrat from Palmyra, and Sen. Vin Gopal, a Democrat from Long Branch, would create state income tax incentives for residents who tuck away money in a designated homebuyer savings account.

“We all recognize that New Jersey is experiencing a housing affordability crisis that hits young homebuyers and families who are first-time homebuyers especially hard,” Gopal said after a Feb. 5 committee hearing. “By providing tax incentives such as allowing a credit against their gross income tax of 5% of up to $15,000 – and making the earnings on that account tax-free – we can help more people onto the path of their first home.”

Although a recent The Harris Poll shows that 85% of Americans believe homeownership remains part of the American Dream, it can seem a distant one. About 71% of aspiring homeowners say they are postponing marriage or children until they can afford to buy a home, according to the poll. And a majority of first-time buyers – 53% of people surveyed – do not expect to own a home until age 40 or later.

More and more middle-class New Jerseyans are being priced out of the housing market, but this is not a unique problem in the state. Nationally, there’s become a trend of housing-focused saving incentives. According to Redfin, New Jersey lawmakers hope to follow the lead of states like Colorado, Iowa, Minnesota, and Virginia, who’ve already implemented similar housing incentives.

New Jersey’s bill would offer incentives, with qualified buyers having the chance to receive a state income-tax credit equal to 5% of up to $15,000 in annual contributions to a designated homebuyer savings account. For qualified home-purchase expenses, things like down payment or closing costs could get a tax break.

Under the bill, a taxpayer who is a certified first-time home buyer is allowed a credit against the gross income tax in an amount equal to five percent of up to $15,000 of contributions (or up to $7,500 of contributions if married filing separately) that are made during the taxable year to one first-time home buyer savings account.”

The bill would also create a tax-advantaged savings program to aid qualifying New Jerseyans who save funds for a down payment.. The program is aimed at first-time homebuyers with an annual income under $175,000. The legislation also requires homebuyers to be current or prospective New Jersey residents, complete a state-approved homebuyer education course, and use funds exclusively for a New Jersey primary residence.

An affordability ranking last year from Realtor.com placed New Jersey among the less affordable states in the country, with a median home listing price of $563,048, a score of 0.58 on a price-to-income index, and giving the state a C-minus grade.

The Senate Budget and Appropriations Committee moved the bill on a bipartisan 4-0 vote, sending it to the full Senate for a floor vote.