Several proposals in the state legislature are designed to help first time home buyers achieve their goal of ownership.
The measures would allow the establishment of dedicated, tax-free savings accounts to be used for real estate expenses such as down payments, closing costs, taxes and fees. Senate Republican Caleb Rowden of Columbia thinks it’ll free up opportunities for a large group of people.
“Home ownership being on the decline, especially among millennials and folks who are getting out of college with more debt than they’ve had previously, trying to find a way that isn’t cost prohibitive at the state level to provide them with some tools that they may not have otherwise, I think is a good thing” said Rowden.
Since the bill offer’s a tax deduction, it could face opposition from some lawmakers concerned about the state’s ongoing budget shortfall.
Shortly after taking office in January, Governor Greitens sliced $146 million in spending to offset a budget shortfall this year. He and state lawmakers are now working on a plan which will chop $572 million from next year’s budget which starts in July.
Because of the rough financial conditions, Rowden is expecting some resistance from his legislative colleagues over his measure, which offers a tax break.
“The tax credit discussion in Jefferson City can get bogged down pretty quick, but it’s a deduction which makes the impact on the state, as far as the fiscal impact, a little less substantive.”
If any of the three measures were to pass into law, they would cost the state about $65,000, according to the non-partisan Committee on Legislative Research. In 2020, that number would balloon to a figure exceeding $1 million.
Another setback for the legislation could be the clock. Only one of the three proposals has received a committee hearing. Rowden admits it’ll be a steep uphill climb to get any one of them passed with five weeks remaining in the legislative session.
“For me, most of the things that I do take a couple of years to get done, so I certainly won’t be calling it quits if we don’t get it across the finish line this year.”
Under the measures, first time home buyers would be able to deduct of up to 50 percent of the money used from their dedicated savings account off their state taxes. The maximum deposit would be $16,000 ($32,000 for couples).
Parents and grandparents could set up an account for their children or grandchildren and contribute money to it. The plan would apply to first time home buyers and those re-entering the housing market, if they haven’t owned a home for three years.
In addition to Rowden’s proposal, there are two measures in the House that would achieve the same purpose. They’re both sponsored by Rep. Becky Ruth (R-Festus).