New law establishes savings program for first-time home buyers in Michigan
By Charles E. Scholl on March 23, 2022 Savings Account
With housing affordability becoming a growing concern, two new bills recently enacted could give hopeful homebuyers a boost by helping them save money up front.
On February 9, Governor Gretchen Whitmer signed Bill 4290 and Senate Bill 145 into law, creating the Michigan First-Time Home Buyer Savings Account program within the Treasury Department. The bills were sponsored by Rep. Mari Manoogian, D-Birmingham, and Sen. Ken Horn, R-Frankenmuth.
Under the new law, first-time buyers can "open an account with a financial institution and designate that account as a homeownership savings account intended to pay or reimburse eligible a beneficiary for the purchase of a home". single family residence in the state.
First-time home buyers and family members can contribute and withdraw from the account tax-free and claim up to $5,000 for a single filing or $10,000 for a joint filing on their annual home taxes. income. Any associated accrued interest is also tax exempt, as long as it is used towards the purchase of a first home. The account has a contribution limit of $50,000, although interest may continue to accrue.
In a state press release, Governor Whitmer said, "Homeownership creates opportunity for Michigan families and lays the foundation for economic success. I'm proud to sign this legislation that will put people in Michigan first by helping families save and buy homes. »
The bill has received praise from leaders in the real estate industry, including James Iodice, President of 2022 Michigan Realtors®, who said, "These accounts will help individuals and families achieve their dreams of homeownership, retain our talented university graduates and promote financial literacy. and smart savings. Iodice added that "Realtors® are very excited to work as ambassadors for this new program. We are grateful to Governor Whitmer, as well as Representative Manoogian and Senator Horn for their leadership on this important issue.
The bills' sponsors say the goal is to give young Michigan residents a head start in the real estate market and keep them here in the state.
Rep. Manoogian said, "This new program will put young people and new families on the path to success and help our state retain its best and brightest, allowing people to stay here in our communities to raise the next generation of Michiganders."
Senator Horn added, "Buying a home is tough, especially in today's economy. We know the importance of home ownership in building vibrant communities and in retaining and attracting young talent to Michigan.
In a press release announcing the new law, Michigan Realtors® highlighted some details of the bill, explaining that "the definition of financial institution is very broad, including both interest-bearing savings accounts and brokerage accounts, providing account holders with the necessary information. the freedom to find the savings vehicle that suits them. The Association also clarifies the term "first-time buyer", defining it as "an individual who is a resident of that state and has not owned or purchased, either individually or jointly, a single-family residence for a period of 3 years. before the date of purchase of a single-family residence.
The Treasury Department is responsible for overseeing the savings program for first-time home buyers. Accounts can be created until the end of 2026 and deductions for contributions can be claimed for tax years 2022-2026.
For more local real estate news and information, be sure to follow the Greater Lansing Association of REALTORS® on Facebook.
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