Congress moves to ease burden of buying homes

February 10, 1991|By David W. Myers | David W. Myers,Los Angeles Times

Some real estate experts expect Congress and the Bush administration to reach an accord this year that will finally allow first-time buyers to make penalty-free withdrawals from their retirement accounts to buy a house.

Proposals aimed at letting cash-strapped buyers tap their Individual Retirement Accounts or other retirement plans have been introduced every year since the mid-1980s. Each proposal has fallen victim to partisan bickering or concerns about their impact on the federal budget deficit.

But now, a renewed sense of partnership on Capitol Hill, coupled with dropping homeownership rates, has Democrats and Republicans lining up behind various IRA proposals that could give the nation's ailing housing market a huge shot in the arm.

Sen. Lloyd Bentsen, D-Texas, will soon introduce a measure that would allow first-time buyers to tap their accounts without paying the 10 percent penalty that the Internal Revenue Service currently levies on early withdrawals.

The bill, which Mr. Bentsen outlined in a recent letter to his colleagues, would also allow parents and even grandparents to make penalty-free withdrawals from their own accounts if the money would be used to help their offspring buy a house.

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