LANSING, Mich. — The state Senate on Tuesday gave final approval to legislation that would allow Michigan residents to set up a savings account to help cover the costs of purchasing their first home.
“Purchasing a home is a major step in anyone’s life,” said Sen. Ken Horn, R-Frankenmuth. “We want to encourage young people to purchase a home and begin their lives here in Michigan. These bills give them an additional tool to assist with what can be a complicated and costly process.”
Senate Bill 511 would create the Michigan First-time Home Buyer Savings Program. The program would allow an individual to create a savings account with their financial institution and designate it as a first-time homebuyer savings account. Funds in the account could be used toward certain eligible costs, such as a down payment or allowable closing costs for a first-time home purchase in Michigan.
The bill would also allow certain contributions and withdrawals as well as interest earned on a first-time home buyer savings account to be exempt from taxation. If a withdrawal is made for a non-qualifying purpose, the amount withdrawn would be added to the taxpayer’s adjusted gross income.
SB 512, sponsored by Horn, would provide a state income tax deduction of up to $5,000 for a single return and $10,000 for a joint return for contributions made into a first-time homebuyer savings account for up to 20 years.
“Many people are struggling with burdensome student loans, and when it comes time to start saving for down payment, home ownership may not seem feasible,” Horn said. “These bills are designed to help ease some of those costs and place homeownership within reach.”
The senator also added that these bills are part of a larger goal.
“Attracting and retaining talent has been something we’ve been working on for a number of years,” Horn said. “These bills are just a single part of a continued effort to attract new talent and encourage new generations of Michiganders to begin their adult lives here in Michigan.”
The bills will now go to Gov. Rick Snyder for consideration.