The House of Representatives today approved state Rep. John Damoose’s bipartisan plan to create a savings program for first-time homebuyers.
“This bipartisan plan will help encourage good financial management and responsible homeownership,” said Damoose, of Harbor Springs. “By equipping people with tools to save for their futures, we can encourage them to establish a more permanent residence in Northern Michigan and across the state, fostering a greater sense of community along the way.”
The plan consists of Damoose’s House Bill 4289 and state Rep. Mari Manoogian’s HB 4290. The bills would allow people to open a first-time homebuyer savings account for themselves or another beneficiary. The program would require an account beneficiary to be a Michigan resident who has not owned a single-family residence within the preceding three years. An account could accept contributions until the balance reaches $50,000.
A beneficiary could only make a qualified withdrawal to pay for the down payment or closing costs for the purchase of a home, at least one year after the account was created. Funds withdrawn for other purposes would be subject to a 10-percent state penalty, but the penalty would not apply to withdrawals due to the beneficiary’s death or disability, for transfer to another homebuyer savings account, for a bankruptcy protection filing, or to meet an immediate financial hardship.
A taxpayer could deduct account contributions minus qualified withdrawals to a first-time homebuyer savings account from annual taxable income, up to $5,000 for a single return or up to $10,000 for a joint return. Interest accrued to the account would also be deducted. A taxpayer could only claim a homebuyer savings deduction up to 20 years.
HBs 4289-4290 now advance to the Senate for consideration.
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