For about 63% of non-homeowners
, 2017 seemed like a good year to purchase a home. Even though it is the prime homebuying time, making that big of a purchase can be stressful and expensive, especially for first-time homebuyers (who account for 32% of all homebuyers
). However, first-time homebuyers residing in Michigan might soon be able to afford the first home of their dreams due to new legislation.
The legislation is currently under consideration by the Michigan Senate and aims to create the Michigan First-time Home Buyer Savings Program. The program would give incentives to the first-time homebuyers in the form of a state income tax deduction.
Michigan State Senator John Proos is a co-sponsor of the legislation. He spoke with WSJM
regarding the deductions.
“It makes a lot of sense that we give them the best benefit possible to accumulate the kind of down payment that helps them to avoid some of the private mortgage insurance costs that add points and add costs,” Senator Proos said.
The plan would give homebuyers an income tax deduction of up to $5,000 for a single return. They would also receive $10,000 for a joint return for contributions that are made into the homebuyer savings accounts. These deductions could last for up to 20 years.
“Often concerns about being able to afford a responsible down payment hold back prospective first-time homebuyers. This is compounded by our state’s booming housing market. Although increasing property values are good for homeowners, schools and local communities, they make it harder for young professionals and new families to afford to buy. That is where this savings program would help the most,” Senator Proos said.
If a withdrawal is made from the savings account for a non-qualifying purchase, the amount withdrawn would be added to the person's adjusted gross income. Having this perk would make it easier for someone to buy their own home, which is something they might not have been able to afford before.
says the package has been advanced by the Senate Finance Committee. It is now on its way to the full Senate for complete consideration.