If you're saving money for a down payment on a home, there's a new Minnesota law that could help.
The First-Time Homebuyer Savings Account was authorized by the Minnesota Legislature in 2017. Effective, December 31, 2016, the savings account allows an individual to deduct 100 percent of the interest earned on the savings account from their state taxes.
In Maple Grove, builder CalAtlantic Homes has townhomes on the market starting at $275,000 and dozens more are under construction near the city's Central Park.
"One of the great things about this product and about this floor plan that makes it so desirable to homeowners is the openess of the space," said Mike Devoe, division president of CalAtlantic Homes, of a featured row home in this year's Parade of Homes Fall Tour
The 3-bedroom, 3.5 bath townhome is the kind of place that could appeal to a number of different buyers, and builders depend on homebuyers of all ages for projects like the one in Maple Grove.
"We get single people, we get young couples that are maybe thinking about starting a family, we get a lot of downsizers," said Devoe.
The First-Time Homebuyer Savings Account could especially help younger buyers and millenials get into the housing market by making their savings dollar stretch a little further.
"As millenials, we face a number of obstacles getting into homeownership, we don't want to live in Uptown or in our parents' basement forever," said Mark Foster of Housing First Minnesota.
A savings account can be opened at any Minnesota bank or credit union. The program is open to anyone who hasn't owned a home within the last three years. Any interest earned on the savings grows tax free. Parents or grandparents can set up an account and receive a deduction from their own state taxes as well.
"It's that incentive to start saving for a down payment and every little bit helps overcome some of those obstacles that are facing younger buyers," said Foster.
With the median home price in the Minneapolis - St.Paul metro hovering around the $250,000 mark, the ability to stretch dollars with a tax deduction could help more people achieve the American dream.
"We see that there's a big opportunity for a lot of young buyers that want to get into homeownership who maybe find it challenging, not as affordable, so programs like this to just make it easier for them to make that leap, is a great thing for everybody," said Devoe.
Alexandra Renslo firstname.lastname@example.org
September 11, 2017