HB177 Alabama 2022 Session

Summary

Primary Sponsor

Kyle South

Republican

Session

Regular Session 2022

Title

Home buyers, extend the ability to create a first-time and second chance home buyer savings account in banks or financial institutions, extend term of account, responsibilities further defined of account holders, Revenue Dept to report additional information, Secs. 24-11-5, 24-11-7, 24-11-10 am'd.

Summary

HB177 extends and tightens Alabama's First-time and Second Chance Home Buyer Savings Account program by lengthening creation and deposit windows, extending the account term, and adding stricter holder responsibilities and reporting requirements.

What This Bill Does

It extends the ability to create first-time and second-chance home buyer savings accounts by five years and allows deposits for up to ten years, with the account term extended to December 31, 2028. It adds stricter account holder duties, including detailed transaction reporting on tax returns, providing Form 1099, and giving a detailed account of eligible costs when funds are withdrawn, with penalties if requirements are not met. It keeps and expands the program's tax incentives, raising deduction limits to $5,000 for individuals and $10,000 for joint filers, and allowing earnings to be excluded from Alabama income tax for up to five to ten years with aggregate caps, while unspent funds may become taxable; it also requires in-state use and imposes annual reporting by the Department of Revenue.

Who It Affects

• Individual and joint account holders who save and withdraw funds for a home purchase in Alabama; they face extended deposit windows and new documentation and reporting requirements, along with potential penalties if they do not comply with the rules.
• Department of Revenue and participating banks/financial institutions; they gain new reporting duties, handling of deductions/exclusions, and documentation requirements related to the savings accounts.

Key Provisions

• Extend the ability to create a first-time/second-chance home buyer savings account by five years and allow deposits for up to ten years, with the account term extended to December 31, 2028.
• Account funds must be used for eligible costs toward purchasing a single-family residence in Alabama and must be documented; failure to provide required documentation may subject the funds to penalties under Section 24-11-8.
• Account holders must submit detailed transaction information and Form 1099 to the Department of Revenue with their Alabama tax return; upon withdrawal, they must provide a detailed account of eligible costs and remaining funds.
• Failure to submit required documentation annually results in automatic denial of the tax deduction and exclusion.
• Tax benefits include a deduction up to $5,000 for individuals and $10,000 for joint filers, and earnings excluded from Alabama taxable income, claimable for up to five to ten years with aggregate limits of $25,000 (individual) or $50,000 (joint); funds must remain in the account until withdrawal for eligible costs.
• Funds not expended by December 31 of the last year of the period become taxable income.
• Funds may not be used to purchase a single-family residence outside of Alabama.
• The Department of Revenue must annually report total deductions claimed, total deposits deducted, number of taxpayers submitting account information, and the number of taxpayers who claimed deductions but did not expend funds or were penalized.
• Effective date is immediate upon passage and approval by the Governor.

AI-generated summary using openai/gpt-5-nano on Feb 22, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Home Buyers