- Public Acts 5 & 6 of 2022 signed on February 9, 2022, created Michigan’s First-Time Home Buyers Savings Program to assist first-time home buyers with the purchase of their Michigan principal residence.
- Act allows an individual to open a new first-time home buyer account with any financial institution authorized to do business in Michigan beginning January 1, 2022 thru December 31, 2026. Funds cannot be co-mingled.
- Purpose of the funds would be for paying or reimbursing eligible costs of purchasing a single-family residence (SFR) for use as a principal residence by a qualified beneficiary.
- Eligible costs include down payment and closing costs shown on a settlement statement for site built, mobile home, condo or manufactured homes.
- Qualified beneficiaries include the account holder or another Michigan resident so long as the beneficiary has not owned or purchased a SFR during the most recent 3 years prior to the withdrawal/use of funds.
- Account must be designated as a first-time home buyer savings account by the account holder and designate a specific beneficiary who is the only person who is eligible to use the funds.
- An individual may establish multiple first-time home buyer accounts but can not have the same beneficiary on multiple accounts.
- An individual may be designated as a qualified beneficiary on more than one account (with different account holders).
- Account must be opened for at least 12 months before you can make a qualified withdrawal.
- Maximum account balance is $50K – not including accrued interest.
- Act allows favorable state tax treatment for qualified contributions and withdrawals from these accounts. (subject to AGI)
- Allows a deduction for contributions made in tax years 2022 thru 2026 less withdrawals from the same account up to a total deduction of $5K on a single return and $10K for a joint return.
- Interest earned is also deductible.
- The financial institution is not responsible for tracking or reporting the deposits or withdrawal activity from this account.
- This is a self-reporting program and the account holder must designate the account on his/her income tax return. They may be required to submit supporting documents with their income tax return. Consult your tax preparer.
- Use of the funds for any purpose other than for eligible costs by a qualified beneficiary for the purchase of a SFR primary residence will subject the account holder to a 10% penalty and loss of tax benefits.
- Exceptions may include the death or disability of the qualified beneficiary, military deployment of the qualified beneficiary, account holder bankruptcy, transferring from one qualified beneficiary to another qualified beneficiary and immediate financial hardships.
- Complete details can be found on the Michigan Department of Treasury website or 2022-PA-0005.pdf (mi.gov)
Contact our Customer Service Team for more information.