First Time Home Buyers Savings Account
Non-taxed, growing savings account?! Yes, Please!
If you are a prospective first-time home buyer in Missouri, you could get help landing your new place beginning January 1, 2019! House Bill 1796, which regards the First-Time Home Buyer Savings Act, was passed by the House by a vote of 132-6. In July, the Governor of Missouri also passed the bill.
The bill is designed to help first-time buyers save up for their first home purchase with an interest-bearing savings account. Interest accrued on the accounts would remain untaxed so long as the funds are used on a home purchase, and buyers would receive a tax deduction once they close on their new home.
Often, new homebuyers’ biggest challenge is coming up with a down payment and closing costs for their home purchase. This new bill should ease the savings process for new buyers.
More details are included in the House committee meeting minutes:
“House Bill 1796 (Ruth, RFestus) Beginning January 1, 2019, this bill establishes the “First Time Home Buyer Savings Account Act” and authorizes an individual income tax deduction for 50% of the contributions to such a savings account dedicated to buying a first home.
The bill specifies that the annual contribution deduction limit is $1,600 for an individual or $3,200 for a couple filing a joint tax return and a first time home buyer is an individual who has never owned a single family, owner-occupied primary residence including a condominium or manufactured home or a divorced individual who has not been listed on a property title for at least three years. The maximum contribution limit for all tax years is $20,000 and the maximum total amount in the savings account is $30,000.
Funds in the savings account can be used only for eligible expenses of purchasing a primary residence in this state, transferred to another first time home buyer savings account or used to pay service fees. Any withdrawal of funds for other purposes will be subject to recapture and penalties.
The provisions of the bill will expire December 31, six years from the effective date.”