Advancing Homeownership At A price Minnesotans Can Afford
#BuildingCommunity #Affordability #MNHomeownership
First-Time Home Buyer Savings Account
There are many pressures on individual and family budgets, such as rent, student loan payments, car payments, child care, health care, and other routine living expenses. With all those pocketbook pressures, saving for a down-payment and closing costs associated with the purchase of a first home can be a significant challenge. First-time buyers were 35% of the market share in 2016 (historical norm is 40%).
Some of the challenges faced by potential first-time home buyers include:
· Lack of inventory--2016 ended with 22% fewer homes for sale in comparison to 2015 and 2015 had 10% fewer homes for sale than 2014 (Source: MN REALTORS® 2016 December Housing Market Report)
· Affordability--Housing affordability is dropping across Minnesota—down 10.3% compared to 2015 (Source: MN REALTORS® 2016 December Housing Market Report)
· Down-Payment--In a January 2017 poll conducted for the MN REALTORS®, 81% of respondents stated that having enough money for a down-payment and closing costs was a huge/medium sized-obstacle that makes buying a home too difficult or expensive
Key features of the bill include:
1. The “First-Time Home Buyer Savings Account Act” would encourage and support homeownership by providing a state tax deduction for saving to buy a first home.
2. Either the first-time home buyer can set up an account for himself/herself OR another person could set up an account and designate a first-time home buyer as the beneficiary (child/grandchild). This account can be set up at any local bank or credit union.
3. The state tax deduction, up to $5,000 for individuals and $10,000 for joint filers, would be for amounts deposited in a designated first-time home buyer savings account PLUS a deduction for the interest income. Eligible expenses that could be paid from the account are the down-payment and closing costs associated with buying a first home.
Issue specifics and bill language are subject to change.*