The Maryland General Assembly passed legislation, HB 1178, which establishes a tax-free homebuyer “savings account,” pending the Governor’s signature.
The bill will allow Maryland residents who have not owned a home in the last 7 years to pay up to $5,000 tax-free into any financial institution’s investment accounts. The annual contribution and earnings on the account are exempt from state taxes only and may accrue up to a maximum of $50,000 tax-free. The account holder will identify their investment account as a tax-free account on their state tax return.
The money must be used for the downpayment and closing costs associated with purchasing a home in Maryland (any cost listed on a settlement sheet). The bill will apply to tax years beginning after December 31, 2020. Finally, again, the bill must be signed into law by the Governor before it becomes law.