Saving for a house could get you a tax break, depending where you live

In other words, these accounts would operate similarly to 529 college savings plans, including the stipulation that the funds must be used only for qualified expenses. For example, a down payment and closing costs are among the home-buying costs that would be fair game.

Supporters of the new accounts say factors like rising home prices and debt — often of the student loan variety — stand in the way of homeownership and these programs will help. Others question whether they will end up getting used by their target audience or become another tax shelter for the wealthy.

“In Oregon, in some areas, the rent is so high that middle-class families can’t save anything for a down payment,” said Daniel Hauser, a policy analyst with the Oregon Center for Public Policy. “This [Oregon program] says if you save for a down payment, we’ll give you a tax benefit. But you can’t get that benefit if you can’t save.”

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The Oregon program will let individuals deduct up to $5,000 in contributions ($10,000 for married couples filing joint tax returns) per year beginning in 2019. The state also ended up imposing income limits for who can get the tax benefit: It starts phasing out for adjusted gross incomes of $149,000 or higher.

Most of these programs have come into existence in the last several years, including in Iowa, Mississippi, Colorado and Minnesota. Montana was the trailblazer, establishing the accounts in 1998.

In Virginia, where the accounts have been around since 2014, few taxpayers have claimed the allowed deduction for contributions.

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