Can You Buy a House With an ABLE Account?

An ABLE (Achieving a Better Life Experience) account offers a financial pathway for individuals living with disabilities to save money without compromising their eligibility for certain public benefits. These accounts serve as a specialized savings and investment tool, designed to help cover disability-related expenses.

Understanding ABLE Accounts

ABLE accounts were authorized by the Achieving a Better Life Experience Act of 2014. Eligibility to open an ABLE account requires that the individual’s disability began before their 26th birthday. This criterion is met if the individual is already receiving Supplemental Security Income (SSI) or Social Security Disability Insurance (SSDI) benefits, or if they have a physician’s certification confirming the onset of a severe functional limitation before age 26. On January 1, 2026, the age of disability onset for eligibility will expand to before age 46, broadening access to these accounts.

Contributions to an ABLE account are subject to annual limits, which for 2025 is $19,000, aligning with the federal gift tax exclusion. An employed ABLE account owner may contribute an additional amount from their earnings, up to $15,650 for 2025, provided they are not contributing to an employer-sponsored retirement plan. While specific state plans may have varying lifetime contribution limits, these typically range from $300,000 to over $500,000. Funds within an ABLE account can be used for “qualified disability expenses,” defined as expenses related to the individual’s disability that help maintain or improve their health, independence, or quality of life. These expenses include education, transportation, assistive technology, healthcare, and financial management services.

Qualified Housing Expenses

Housing-related costs are recognized as qualified disability expenses for ABLE accounts. While the direct purchase of a primary residence, including a down payment, can be considered a qualified disability expense, many ongoing housing costs are also included.

Qualified housing expenses include rent payments, mortgage payments, and property taxes. Utility charges such as heating fuel, gas, electricity, water, sewer, and garbage removal are also permissible expenses. Home repairs, especially those related to maintaining the home’s habitability or making modifications for accessibility, qualify as legitimate uses of ABLE funds. Maintaining detailed records and receipts for all housing expenditures is advisable, as account holders are responsible for verifying that withdrawals align with qualified disability expenses.

Impact on Government Benefits and Financial Planning

ABLE accounts offer favorable treatment concerning government benefits, particularly Supplemental Security Income (SSI) and Medicaid. For SSI purposes, funds held in an ABLE account, up to $100,000, are generally disregarded as a countable resource. If the account balance exceeds $100,000, SSI payments may be suspended until the balance falls back below this threshold. Eligibility for Medicaid is not affected by the balance in an ABLE account, regardless of the amount.

When using ABLE funds for housing expenses, a specific rule applies to SSI recipients known as the “24-hour rule.” Funds must be withdrawn from the ABLE account and spent on the housing expense within the same calendar month to not count as income. If housing funds are retained into the following month, they may then be counted as a resource, potentially impacting SSI eligibility. This highlights the importance of timely payment of housing costs from an ABLE account.

Financial planning with an ABLE account involves coordinating funds to maximize benefits and support long-term stability. It is important to avoid non-qualified withdrawals, as these can have adverse tax implications. If funds are withdrawn for non-qualified expenses, the earnings portion of that withdrawal becomes taxable income and may also be subject to an additional 10% federal tax penalty, along with potential state taxes. Utilizing ABLE accounts effectively allows individuals with disabilities to save for significant expenses, including housing, while preserving access to essential public benefits and fostering greater financial independence.