JEFFERSON CITY, Mo. – If Rep. Becky Ruth’s HB 1796 is signed into law, then those seeking to buy their first home might have an easier route to travel.
The bill establishes the “First-Time Home Buyer Savings Account Act,” which authorizes an individual income tax deduction for 50 percent of contributions “to such a savings account dedicated to buying a first home.”
“As a real estate agent, the hardest thing for first time home buyers is coming up with down payment funds or closing costs,” Ruth said. “When we talk about college students especially, with the amount of student loan debt that they have, they’re struggling to put money into savings. Millennials really have a difficult time with saving money. So this is kind of an encouragement to help them save money for those down payments and closing costs.”
The annual contribution deduction limit would be $1,600, and the maximum contribution limit for all tax years is $25,000. The bill also stipulates that the maximum total amount in the savings account would be $50,000.
The funds would only be allowed to be used for the expenses of purchasing a primary residence in the state and carries a start date of January 1, 2019.
Ruth’s bill was heard in the House Committee on Financial Institutions on Tuesday afternoon, where she compared the proposed accounts to those of the MOST 529 plan.
Supporters of the bill told the committee that it was an economic development tool, putting a lot of people to work and income into local government and communities.
The bill is similar to the one Ruth carried during the last session, which passed out of the House Committee on Financial Institutions.
Last year, the fiscal note was a concern for the committee, and remained a concern in the committee this year, as the note shown an increased number from the 2017 one.
Testifying for the Department of Revenue, Mark Siettmann told the committee that the department had taken a hard look at the fiscal notes and that there “absolutely was an error in last year’s bill.”
He said that in the bill, there had been a typo, stating 6,000 homes instead of 60,000.
“This year’s bill is based on 81,000 homes, which is the actual number of sales in the year before,” he said.
No action was taken by the committee.