Learn and Live in Connecticut: First-Time Home Buyer Trust Fund
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Frequently Asked Questions
How does the program work?
Income tax paid by a graduate gets deposited into his or her account within the First-Time Homebuyer Trust Fund. The accumulation of the taxes paid over the years becomes a sort of savings account from which recent graduates save money for the purchase of a home in Connecticut, rather than paying state income taxes.
Who is eligible to participate in the program?
Any person who graduates from an accredited institution of higher education within the state of Connecticut beginning with the class of 2007 is eligible. This includes both public and private universities and colleges.
How much money can a participant put into their account?
Anyone who participates will automatically contribute the lesser of their state income tax liability or $2,000 each year.
How will graduates be identified?
Instructions on state income tax forms will require qualified individuals to show proof of graduation as a part of their state income tax filing. Participation in the program is not automatic; the burden for opening an account and contributing each year is on the graduate.
How will students find out about the program?
Ideally, career service offices (or other similar offices) of the higher education institutions will inform every student who comes through their doors. The state should also promote it through public service announcements.
How long does each account remain in tact?
Participants can access the money in their accounts only one time within 10 years of their graduation. After 10 years has passed and money has not been withdrawn from the account, the money will go into the state’s General Fund.
What if a graduate uses money for a purpose other than the purchase of a home?
The state will be allowed to recoup the amount of money withdrawn by graduate plus a $200 penalty, and the graduate would no longer be eligible for the program.
What if a graduate moves out of state?
The program is open to Connecticut residents, who pay income tax to Connecticut. When a person moves out of state, he or she is not eligible to contribute to their account. However, the account remains open, and if a participant moves back to Connecticut, they can once again put their state income tax into the account, as long as the 10-year time limit has not expired.
How will students be informed about the status and dollar amounts in their accounts?
The Department of Revenue Services will mail an account statement that shows the amount in graduates’ accounts, as well as the expiration date of each particular account.
How does a change in marital status affect deposits into my account?
Graduates will not be penalized in any way for getting married. Each spouse will have access to all of the money in his or her individual account. If both spouses previously participated individually, then income tax deposited after being married will go into either spouses account. If only one spouse was previously a participant, then he or she would continue to be the account holder and taxes would continue to be deposited into the account, despite the fact that the other spouse may not be eligible to participate. (These scenarios apply to joint filers only.)
What is the Trust Fund?
The Trust Fund is controlled by the State Treasurer and it contains an accumulation of all state income taxes paid by recent college graduates who participate in the program. The Treasurer will be allowed to invest the money, just like money in any other fund.
What happens to the investment income from the Trust Fund?
The interest and investment income from the income taxes in the fund would be deposited annually into the state’s General Fund.