Developers and real estate investors have been pushing for mortgage down payments to be granted tax-exempt status, the New York Times reported.
U.S. Congress should authorize individual mortgage savings accounts to make it easier for prospective buyers to save for a down payment, the coalition called Smart Growth America of Washington said. Only first-time buyers who can make pretax contribution to such an account would be eligible, and funds put toward a home purchase would be tax-exempt, the proposal stated.
“It would encourage individuals to start saving earlier for down payment and closing costs,” Ilana Preuss, chief of staff of the coalition, told the Times, “and it would really make their dollar go further.”
The Federal Home Loan Bank of New York currently has its own mortgage savings account program for New York and New Jersey residents, which provides first-time buyers earning no more than 80 percent of area median income matching funds for money they have saved.
The coalition’s idea is modeled on a program in place in the state of Montana. There, however, few people – no more than 225 in a given year — have taken advantage of the program, according to the Times.
“What you’ve got to understand is, this is people trying to get into their first home,” Edmund Caplis, director of tax policy and research at Montana’s revenue department, told the Times. “For most working families, trying to pull together an extra buck is a stretch.” [NYT] — Hiten Samtani