Young Families Homeownership Act of 1979

Young Families Homeownership Act of 1979 - Amends the Internal Revenue Code to replace the current income tax credit for the purchase by an individual of a new principal residence with a credit equal to 20 percent of the sum of annual cash contributions to an individual housing account.

Defines an "individual housing account" as a trust created for the exclusive benefit of an individual, or of a married couple, and exclusively for the purchase of a principal residence, for which annual contributions may not exceed $2,500, or $10,000 over the course of 120 months, by which time the entire interest of the individual or couple in such account must be distributed for the residential purchase.

Limits: (1) the annual credit to $500 per individual ($1,000 per married couple); (2) the total lifetime credit to $2,000 per individual ($2,000 per couple, also); and (3) eligibility for such credit to individuals and married couples who do not own and have never owned a principal residence.

Assesses penalties for excess contributions or for distributions of account funds for purposes other than the purchase of a principal residence.