First-Time Homebuyer Savings Accounts Become Closer to Reality in Ohio
August 9, 2019 |
A first-time homebuyer is a buyer that has not owned a property in the last three years. With the tightening of lending requirements after the mortgage crisis and increasing costs of housing, many first-time homebuyers have trouble saving for a down payment on a home.
The legislation is currently pending in Ohio that would create savings accounts that first-time homebuyers can use to save for a down payment to purchase a home. In addition to the benefit of setting aside money for a down payment, first-time homebuyers will be able to deduct from their taxable income the contributions to the savings accounts. The contributions are limited, to $5,000 per year for individuals and $10,000 for joint filers. There’s a
lifetime deductible cap of $50,000 for single filers and $100,000 for joint filers and the money in the savings account must be used within 15 years for the purchase of a home.
Senator Theresa Gavarone, of Bowling Green, introduced the legislation and testified in support of the measure. She cited to statistics that in the last twenty-five years, the average age of first-time homebuyers has risen from mid-twenties to mid-thirties. Further, eight out of ten renters have saved less than $10,000 for a down payment. Senator Gavarone noted that the proposed law has been modeled after similar laws enacted in eight other states. As for the need for the legislation, she testified, “Ultimately, we want to encourage renters to purchase a home. Homeownership can provide many social and economic benefits, not just for the homeowner, but for the communities in which they live. However, without changes, the reality is many young people are going to delay the purchasing of a home.”
Representatives from the Ohio Realtors, the Ohio Bankers League, Ohio Mortgage Banker’s Association, Ohio Credit Union League, and the Ohio Manufactured Homes Association testified in support of the measure.
Anjanette Frye, the Ohio Realtors President, testified that the average age of first-time homeowners has increased due in part from higher student loan debt and fears from the mortgage crisis. This legislation will help one of the significant barriers to homeownership, the down payment. She argued that homeownership is great for Ohio’s economy and a good investment for Ohioans. Last she noted that in 2018, Ohio ranked sixth in the nation for most moved from states. Easing the barriers to homeownership will help to keep talent in Ohio.
The legislation is still pending before the Senate Ways and Means Committee. The text of the legislation, analysis, and additional testimony can be viewed at SB 139.