Mississippi residents may open a First-Time Home Buyer Savings Account, which allows for a tax deduction as they save for a new home.

The law enables individual Mississippians to deduct up to $2,500 from state adjusted gross income annually, and couples filing jointly are able to deduct up to $5,000 annually from their state adjusted gross income, according to a news release from Mississippi Realtors. Interest earned on the account is also exempt from state gross income, and there is no cap on the aggregate amount that can be saved. The money may be used for down payments or other home purchase related expenses, according to the news release.

Gov. Phil Bryant signed HB 1601 on March 22. It Unanimously passed the House and passed the Senate 51-1.

 

The state Realtors supported the legislation and five Meridian Realtors were among realtors who met with legislators on Feb. 2 as part of Realtor Day at the state capitol and emphasized the bill as a priority. They followed up with a “Call for Action” email campaign to representatives when the bill came up for a vote, according to a news release.

Eligible single-family homes includes newly-constructed homes, existing homes, manufactured homes, modular homes, mobile homes, condominium units, or cooperatives, according to the news release.

Individual account holders are responsible for maintaining the funds in a separate account and reporting to the Department of Revenue, according to the news release. Unqualified use of the funds is penalized 10 percent and all back taxes associated with the account.

Projections indicate approximately 379 new homes will be constructed as a result of the law, according to the Realtors. First-time home buyer households will spend an additional estimated $1,830 annually in their communities, according to the Realtors..