76.4 F
78.7 F
78.2 F
73.3 F

First-Time Homebuyer Savings Accounts renewed, thanks to Alabama Realtors

In 2018, the Alabama Association of Realtors led a legislative effort to create a First-Time Homebuyer Savings Account (FHSA) program.

The association recently revisited the legislation due to the approaching deadline of the program’s five-year sunset clause. Having a partaken in a call to action, the realtors community urged lawmakers to understand the importance of tax-free savings accounts for prospective homeowners.

Due to the association’s efforts, lawmakers not only renewed the program, but extended and bolstered it with fraud protections and transparency measures.

Four years ago, Alabama became one of the first states to establish an FHSA program. Leading the charge, the state affiliate partnered with the National Association of Realtors to conduct polling, economic research and legislative development.

As the five-year sunset clause approached, the association acted to not simply preserve the program, but to extend its benefits and increase its transparency and accountability.

The state’s original FHSA program enabled first-time buyers and second-chance buyers to hold $5,000 in tax-free annual savings ($10,000 for couples) in accounts to be utilized for down payments and closing costs.

The economic impact associated with the savings accounts resulted in a net positive for Alabama as a whole, due to the uptick in jobs and activity stemming from increased homeownership levels.

According to Alabama Association of Realtors President Jeremy Walker, the industry knew it would have to routinely promote the legislation’s renewal given that the state budget requires that all new tax-incentive and tax-credit legislation include a five-year sunset clause.

“We see this as a marathon, not a sprint,” said Walker, “and there was always going to be a big learning curve.”

The association took to action and launched a comprehensive, multi-level education and awareness campaign for lenders, brokers, and potential homebuyers when the program launched in 2019. Housing inventory and skyrocketing costs would soon negatively affect the market due to the COVID-related economic downturn.

“Not only were we facing the five-year sunset clause on the program,” noted Walker, “but these savings accounts were to be used within five years towards the purchase of a home; circumstances being what they are, that is no longer a realistic expectation.”

The Alabama Association of Realtors swiftly returned to legislative action to ensure that the terms were extended to enable the accounts to build for 10 years. This resulted in potential homebuyers being able to save money for an extended period of time and find a home.

The association, with assistance from the National Association of Realtor’s Advocacy Everywhere program, partook in an awareness campaign to stress the importance of bolstering the savings program.

“There’s a great tradition here in Alabama of our REALTORS® being extremely engaged in our legislative activity, it is always impactful when they make their voices heard,” said Walker. “That was certainly the case, this time!”

Having garnered bipartisan support, the bill passed both chambers in the Legislature and was signed into law by Gov. Kay Ivey in April.

In addition to extending the terms from five to 10 years and instituting fraud prevention measures, the renewed legislation enables the Department of Revenue to track and quantify when accounts are opened, and when the proceeds are used to purchase a home.

“We are so grateful to the National Association of REALTORS® and the REALTOR® Party staff for all the resources and expertise they put towards developing and passing the original draft of this important legislation, plus the educational outreach, and now, this renewal of the program. We could not have done it without their help,” said Walker.

The Alabama Association of REALTORS® serves as the voice of the real estate industry in Alabama and as the official advocate of Alabama’s multifaceted real estate industry before state, local, and federal government.

Don’t miss out!  Subscribe today to have Alabama’s leading headlines delivered to your inbox.