Since Jan. 1, Alabamians have been eligible to open a new type of tax-advantaged savings account designed to encourage home ownership. Known as an “Alabama First-Time and Second Chance Home Buyer Savings Account,” eligible account holders – an individual who resides in Alabama and has not owned or purchased, either individually or jointly, a single-family residence during a period of ten years prior to the date of the purchase of a single-family residence – can receive up to a $5,000 (or $10,000 if filing jointly) for contributions to (and earnings on) these accounts, provided the account holder uses funds in the account to pay a down payment or closing costs on a single-family residence located in Alabama. Starting May 1, the Alabama Association of Realtors (AAR) plans to aggressively market to its membership the name and contact information of any financial institution in Alabama offering these accounts. Pursuant to the 2018 law authorizing these accounts, which you can read here, banks offering these accounts are required to do only two things: (1) properly designate the account as a “first-time and second chance home buyer’s savings account” on records and transactional statements related to the account, and (2) provide the account holder with a detailed account statement on a yearly basis (note that the Department of Revenue interprets this requirement to be “at least” on a yearly basis, meaning the provision can be satisfied by providing account holders with monthly or quarterly account statements). If you plan to offer, or are already offering, these accounts to your customers, contact AAR Director of Communications and Marketing Ms. Bradshaw Tyson at (334) 262-3808 or at bradshaw@alabamarealtors.com for some free publicity to AAR’s over 16,000 members. AAR has also produced a handy FAQ page about the new law, which you can access here.
