Wednesday, February 24, 2021

First-Time Home Buyer Savings Account Signed Into Law

 

Mississippi Capitol Building in Jackson. Photo courtesy of Visit Mississippi

Mississippi is helping lead the way to home ownership after Gov. Phil Bryant on March 22 signed HB 1601 into law.
The law establishes a First-Time Home Buyer Savings Account, allowing Mississippians to create monetary savings accounts for down payments or other home purchase related expenses.
Mississippi REALTORS® President David Griffith said home ownership is part of the American dream.
“With this law, more Mississippians will be able to invest in themselves and their communities,” he said. “One of our priorities as REALTORS® is to provide every Mississippian the opportunity to own a home. Through the leadership of Gov. Bryant, Speaker Gunn and Lt. Gov. Tate Reeves, Mississippi has created a smoother path to home ownership.”
The law enables individual Mississippians to deduct up to $2,500 from state adjusted gross income annually, and couples filing jointly are able to deduct up to $5,000 annually from their state adjusted gross income. Interest earned on the account is also exempt from state gross income, and there is no cap on the aggregate amount that can be saved.
Eligible single-family homes includes newly-constructed homes, existing homes, manufactured homes, modular homes, mobile homes, condominium units, or cooperatives.
Individual account holders are responsible for maintaining the funds in a separate account and reporting to the Department of Revenue. Unqualified use of the funds is penalized 10 percent and all back taxes associated with the account.
HB 1601 was introduced by Rep. Jeff Smith. It unanimously passed the House and passed the Senate 51-1.
“The Mississippi REALTORS® would like to thank Ways and Means Chairman Jeff Smith, Finance Committee Chairman Joey Fillingane, Rep. Jason White and Sen. Barbara Blackmon for helping to make the dream of home ownership a reality for all Mississippians,” said Clarke Wise, Mississippi REALTORS® Governmental Affairs Director.
As a result of the law, projections indicate approximately 379 new homes will be constructed to meet demand. It is also estimated that first-time home buyer households will spend an additional $1,830 annually in their communities.
The law goes into effect immediately. Mississippians can begin taking the tax deduction in tax year 2018.
Mississippi is now one of only four states to have a First-Time Home Buyer Savings Account program. Montana, Virginia, and Colorado passed similar laws in recent years.
“We hope that other states will follow Mississippi’s example and provide similar relief for first-time home buyers,” Griffith said.


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