First-time home buyer; savings accounts for purchase of single-family residences, tax exemption. (HB1868)

Introduced By

Del. Tag Greason (R-Potomac Falls) with support from co-patron Del. Chris Peace (R-Mechanicsville)


Passed Committee
Passed House
Passed Senate
Signed by Governor
Became Law


First-time home buyer savings account. Establishes beginning in 2013 first-time home buyer savings accounts that accrue tax-free income and that are to be used for saving funds for the purchase of homes by first-time home buyers. Funds in the account, including any income, would be exempt from individual income tax so long as withdrawals from the account are used for the down payment and allowable closing costs (eligible costs) for the purchase of a home by a first-time home buyer. Funds in the account would be required to be used for eligible costs within the 10-year period following the year in which the account was established.

Any resident of the Commonwealth would be allowed to maintain and make contributions to his first-time home buyer savings account. Only cash contributions could be made to the account. In 2013 an account holder would be allowed an individual income tax deduction equal to the amount the person contributed to his account, but not to exceed $13,000 per account. In 2014 and thereafter, the $13,000 maximum deduction per account would be increased annually by the same amount that the federal annual exclusion for gifts increases for the year. Capital gains, interest income, or other income earned with regard to funds contained in the account would be excluded from income in computing Virginia individual income tax.

However, if funds are withdrawn from the account for purposes other than to pay eligible costs, a penalty of 10 percent of the amount withdrawn would be imposed. In addition, the amount so withdrawn would be subject to individual income tax. No penalty or income tax would be imposed if the withdrawal is (i) because of the death or disability of the account beneficiary or (ii) a disbursement of assets pursuant to a filing for protection under federal bankruptcy laws.

If funds remain in the account at the end of the 10-year period, a penalty of 10 percent of the value of the funds remaining in the account would be imposed. In addition, individual income tax would be imposed on the value of the funds remaining in the account. Read the Bill »


02/12/2013: Failed to Pass in Committee


01/08/2013Prefiled and ordered printed; offered 01/09/13 13102564D
01/08/2013Referred to Committee on Finance
01/14/2013Assigned Finance sub: #1
01/23/2013Impact statement from TAX (HB1868)
01/25/2013Impact statement from TAX (HB1868)
01/28/2013Subcommittee recommends reporting with amendment(s) (8-Y 0-N)
01/30/2013Reported from Finance with substitute (22-Y 0-N) (see vote tally)
01/30/2013Committee substitute printed 13104669D-H1
02/01/2013Read first time
02/04/2013Read second time
02/04/2013Committee substitute agreed to 13104669D-H1
02/04/2013Engrossed by House - committee substitute HB1868H1
02/05/2013Read third time and passed House BLOCK VOTE (100-Y 0-N)
02/05/2013VOTE: BLOCK VOTE PASSAGE (100-Y 0-N) (see vote tally)
02/06/2013Constitutional reading dispensed
02/06/2013Referred to Committee on Finance
02/08/2013Constitutional reading dispensed
02/08/2013Referred to Committee on Finance
02/12/2013Passed by indefinitely in Finance with letter (15-Y 0-N) (see vote tally)
02/12/2013Impact statement from TAX (HB1868H1)


This bill was discussed on the floor of the General Assembly. Below is all of the video that we have of that discussion, 2 clips in all, totaling 1 minute.


Va Housing Coalition, tracking this bill in Photosynthesis, notes:

The VHC supports this bill that will encourage savings for homeownership by first time homebuyers.