Senators continue to debate the merits of the "One Big Beautiful Bill Act," but one component has drawn bipartisan support for its potential impact on future homebuyers.
Invest America Act, a provision in the nearly 400-page bill, offers a savings plan for the next generation of house hunters. The provision offers a tax-advantaged savings account with a $1,000 seed investment from the government for those born between January 2025 and December 2028. Family and friends can contribute $5,000 annually into the account. At 18 years old, the once-tax-deferred account will be taxed at the capital gains rate, or up to 20%, once the funds are removed.
The Invest America Act can lead to a payoff in the long run, said Erika Ludvigsen, national director of residential analytics for Homes.com.
"The savings would provide first-time buyers with a significant head start," Ludvigsen said.
A minimal annual contribution of $1,000 over two and a half decades can lead to a return of $68,667, including inflation.
Home prices will continue to move upward, Ludvigsen said, and so the return may not cover a 10% down payment for the median sales price of a house in the future. However, a slightly more generous annual contribution may help the future buyer get there.
"Larger annual contributions," Ludvigsen said, "would narrow the gap, in addition to first-time buyer programs or additional assistance from family."
The House passed and sent the "One Big Beautiful Bill" to the Senate in late May. The legislation is a comprehensive reconciliation bill that includes tax cuts, spending adjustments across federal programs, and an increase to the statutory debt limit. The bill contains several real estate- and housing-related components. Some initiatives have to be renewed or modified before their expiration date in December — think state and local taxes, or the SALT, deduction — and it will go through several iterations before it comes up for a vote.