New Mississippi law provides a first-time home buyer account to provide aid to the purchase of a new property.
Mississippi is helping lead the way to home ownership for first-time home buyer
Gov. Phil Bryant on March 22 signed HB 1601 into law after unanimously passing the House and passing the Senate 51-1. The Mississippi law will establish a First-Time Home Buyer Savings Account. This new law will create savings accounts for down payments or other home purchase related expenses for Mississippians.
Mississippi is now one of only four states to have a First-Time Home Buyer Savings Account program. Among the other states are Montana, Virginia, and Colorado.
Details of the new law
Eligible single-family homes include newly-constructed homes, existing homes, manufactured homes, modular homes, mobile homes, condominium units, or cooperatives. The law should cover most home types.
Additionally, individual Mississippians to deduct up to $2,500 from state adjusted gross income annually. Any couples filing jointly are able to deduct up to $5,000 annually from their state adjusted gross income. Moreover, a Mississippi homeowner can also exempt the interest earned on the account from the state gross income. Furthermore, there is no cap on the aggregate amount that can be saved.
Of course, individual account holders are responsible for maintaining the funds in a separate account and reporting to the Department of Revenue. Consequently, a Mississippi homeowner violating the terms of the account with unqualified use of the funds clause is subject to a 10% penalty. Also, the account holder must pay back all back taxes associated with the account.
The new law goes into effect immediately. Mississippians can begin taking the tax deduction as soon as tax year 2018.
Projected effect on Mississippi housing inventory could be profound
Some analysts are estimating that first-time home buyer households will spend an additional $1,830 annually in their communities.