Committee hears testimony on House Plan savings account for first-time buyers; substitute to be circulated

The Senate Housing and Land Use Committee on Tuesday heard a presentation and public testimony on Senate Bill 343, which would create a first-time homebuyer savings vehicle called the Homeownership Using Savings and Earnings (HOUSE) Plan. Sponsor Senator Huntsville described the plan as a post-tax savings account whose earnings would be exempt from Delaware income tax if used for eligible home-purchase expenses.

Senator Huntsville, the bill sponsor, told the committee the HOUSE Plan would let individuals save for costs such as down payments and closing costs and could also be used for security deposits and a first month’s rent in some cases. "Earnings on the amounts held in the HOUSE Plan count as free from Delaware income taxation," the sponsor said, adding that corporations could contribute to accounts for employees and that a substitute draft is being prepared to refine eligibility and contribution limits.

Supporters from nonprofits and the housing industry urged the committee to advance the bill. Becca Cotto of YWCA Delaware said the plan would expand access to safe, stable housing and help survivors of domestic violence and families facing instability. "This plan helps address that barrier by giving first-time homebuyers a practical and flexible way to save for down payments, closing costs, and other essential expenses," Cotto testified. Phil McGinnis of the Delaware Association of Realtors said the proposal creates a dedicated tax-advantaged account for first-time buyers and called it a low-cost, practical step toward building financial literacy and generational wealth.

State finance officials urged more drafting work before the committee advances the bill. Rebecca Goldsmith, deputy secretary of finance, told the committee that "the legislation in its current form has a number of significant tax policy and drafting questions that remain unsolved and likely warrant additional consideration before moving forward." She identified open issues including who may hold and access accounts and what happens on an account holder’s death, whether beneficiaries may access funds directly, the potential for out-of-state homeowners to qualify improperly, broad and undefined spending categories, the absence of reporting requirements for financial institutions, and unresolved federal tax-treatment and reporting questions.

Sponsor and committee staff said many operational details would be addressed in regulations and in the substitute. Holly Vaughn Wagner of the Division of Legislative Services said the HOUSE Plan board is patterned after Delaware’s 529 statute: a temporary board is expected to stand up the program and make initial regulatory decisions, after which administration would shift to a plan management board at the treasurer’s office. The sponsor also described proposed contribution limits in the substitute: up to $7,500 annually for an individual and $10,000 for joint account holders, and removal of a prior time-by-which funds must be used.

The committee did not take a final vote on Senate Bill 343. Chair Senator Lawson said the committee would circulate the substitute for additional stakeholder review before further action. The meeting approved routine minutes from the May 20 session earlier in the agenda and adjourned after the HOUSE Plan discussion.

What’s next: Committee staff said they will circulate the substitute and continue stakeholder consultations; no committee vote on the bill occurred during this meeting.