Senate Passes “Michigan First-Time Homebuyer Savings Account” Legislation: Bills now Move to the House for Consideration
Today, the Michigan Senate voted to pass the Michigan First-Time Homebuyer Savings Account legislation. These bills now head to the Michigan House of Representatives for consideration. Senators Peter MacGregor (R-Rockford) & Ken Horn (R-Frankenmuth) are the lead sponsors of this legislation, and we are grateful for their work on this innovative savings measure.
Senate Bills 511 and 512 would create the Michigan First-Time Homebuyers Savings Account, a new incentivized savings vehicle to support homeownership rooted in Michigan. Today’s landscape for the Michigan first-time homebuyer is significantly different from that of prior generations. College graduates face mounting student loan debt. Down payment requirements have risen and become more complex. For the first-time homebuyer, these variables, along with trying to make ends meet, make the already significant first-time home investment that much more complicated.
These bills would create a new savings account to be opened, either jointly or individually, to the benefit of a qualified first-time homebuyer beneficiary. Michigan Realtors® sees at least 3 very valuable uses for this savings vehicle:
- For the parent, grandparent, or guardian, the ability to begin saving to the benefit of a minor-dependent towards their first-time home purchase rooted in Michigan;
- For the individual in high school, college, or beyond, that begins saving for themselves with the goal of homeownership rooted in Michigan;
- For the individual that has not owned a principle residence in the previous 3-years, whether due to financial hardship, foreclosure, or credit recovery, providing a new savings tool for homeownership;
In addition, the account holder could receive up to 20-years of investment deductibility off the account holder’s state income tax, while allowing the interest on the account to grow tax-free. Under the legislation, the annual deductibility thresholds are up to $5,000 for a single tax return and $10,000 for a joint filing. Contributions for the account would be limited to $50,000.