Making it Easier to Save for That First Home

Feb 27, 2014

If Governor McAuliffe signs the legislation, people will have more incentive to settle down in the Commonwealth. The Virginia Senate has just passed a House bill that allows those who are interested in purchasing a house for the first time to establish an interest-earning, home-buying savings account.

One of the bill’s benefits is that the growth in the account will have state tax exemptions—as long as it's used solely for the down payment and closing costs for first-time home buyers. The bill's sponsor, Delegate Tag Greason, says the best part is that others can contribute to the prospective home-owner’s fund.

Greason says initially the bill was met with some resistance by those who thought it would result in lost tax revenue.

The bill limits the amount of principal that can be contributed to the account to 50-thousand dollars and caps the total amount that can be retained at any time to 150-thousand dollars. If the money is withdrawn for other purposes, the state would not only tax the interest earned but also impose a five-percent penalty.