In 2019, the federal first-time home buyer tax credit was no longer available for new home owners.
Due to the increasing difficulty for younger generations to afford a new home (high student loan debt and rising housing costs), Wisconsin has proposed legislation to provide a tax-credit for first-time home buyers who are saving for their first home.
The First-time Homebuyer Savings Account (FHBSA), would provide state tax incentives to encourage future home buyers to start saving money to purchase their first home. Some additional information regarding the FHBSA courtesy of this article.

What is the FHBSA? The FHBSA is a program that helps first-time homebuyers save enough money to purchase a home. The FHBSA is a savings account that may be opened at any financial institution that grows free from Wisconsin taxes. In other words, the interest and any capital gains earned on the account are not subject to state taxes.

Who is eligible? The program is available to all “first-time” homebuyers, which means individuals who have (a) never owned a single-family residence either individually or jointly, or (b) previously owned a single-family residence but not during the past 36 months.
What are the benefits of opening an FHBSA? To make it easier to save enough money necessary for a down payment to purchase a home, the FHBSA program has the following benefits:
  1. Interest and capital gains on savings grow tax-free: All interest and capital gains on savings deposited into the FHBSA grows tax free, state tax only, until the money is withdrawn to purchase a home. This means that homebuyers who deposit money into an FHBSA will not have to pay a Wisconsin capital gains tax when withdrawing the money to purchase a home.
  2. Deduction for contributions: Prospective homebuyers who deposit money into an FHBSA will be allowed to deduct up to $5,000, or $10,000 if filing a joint income tax return, per year up to a maximum of $50,000 over the lifetime of the account. Anyone can contribute to the FHBSA, but only contributions made by the prospective homebuyer(s) are eligible for the deduction.
  3. Withdrawals are not taxed: An FHBSA provides a unique savings opportunity for homebuyers because both the contribution and the gains and interest earned on the contribution can be withdrawn tax-free. This makes the FHBSA different than both a traditional IRA and a Roth IRA, which both allow withdrawals for first-time home purchases. Withdrawals from both traditional IRAs and Roth IRAs for a first-time home purchase are limited to $10,000 in total. In addition, distributions from traditional IRAs are taxed as ordinary income, while withdrawals from Roth IRAs are taxed as income if they are withdrawn prior to being in the account for five years.
What are the other restrictions on FHBSAs? To ensure that the money is spent on a home purchase, once a prospective homebuyer opens an FHBSA, the prospective homebuyer must purchase a home within 10 years. If the homebuyer fails to purchase a home within 10 years after opening the FHBSA, the money deposited will be returned to the prospective homebuyer. Moreover, the FHBSA program places a $50,000 limit on the total amount of deductions that can be taken out over the lifetime of the account.
Withdrawing any funds from an FHBSA for any unauthorized purpose would result in a 10 percent penalty plus any capital gains on the amounts withdrawn.

Which other states have programs similar to the FHBSA program? At least nine states across the country have enacted FHBSA programs, recognizing the positive impact of homebuying on state and local economies. These states include Alabama, Colorado, Iowa, Minnesota, Mississippi, Missouri, Montana, Oregon and Virginia.

Long-story short: If you are looking to buy your first home, or know someone who is, make sure they are aware of this potential new program. Hopefully it makes the cut😉.