Michigan First-Time Home Buyer Savings Program offers favorable state tax treatment to new homebuyers
The Michigan First-Time Home Buyer Savings Program was created in 2022 to assist first-time home buyers (a Michigan resident who has not owned or purchased a single-family residence during a period of 3 years before the date of the purchase of a Michigan single-family residence) with the purchase of their Michigan principal residence. The program allows an individual to open a first-time home buyer savings account with any financial institution authorized to do business in Michigan, and allows for favorable state tax treatment for qualified contributions and withdrawals from these accounts.
The tax benefit of this program allows for a maximum state income tax deduction on contributions of up to $5,000 (filing single)/$10,000 (filing jointly) per year, with a $50,000 overall account balance limit. Interest earned in the account is also tax-deductible for Michigan state income taxes to the extent the interest is not deducted in determining federal AGI.
Savers can contribute until 12/31/26 and there appears to be no time limit on when the money can be withdrawn for allowable costs (down payment and closing costs). Qualified beneficiaries transfers are allowed without penalty.
For more information about this Michigan program, contact your ShindelRock tax professional or review the FAQs here.