You must have opened your account which is designated as a first-time and second chance home buyer savings account on or after January 1, 2019. Only the account holder(s) can claim deposits as qualified deposits. If contributions are made to your account by individuals or organizations on your behalf, they do NOT qualiy as qualified deposits.
Any funds deposited into your account must be used by December 31st of the fifth year to purchase a home in Alabama or the entire fund's balance must be included in your income. You must maintain and submit annually with your return any supporting documentation provided by the financial instution for your account. Any funds withdrawn for reasons other than the purchase of a first-time home will require you to include the entire balance of the fund, including accumulated earnings, in income for that tax year as well as a withdrawal penalty equal to 10% of the amount withdrawn. Any earnings on the account are not taxable if you used them to purchase your first home in Alabama.