Virginia Sets First-Time Buyers Up for Home Ownership

July 2, 2014

Virginia has approved a new law that will allow first-time home buyers to invest up to $50,000 in financial institutions that can be earmarked as a first-time homebuyer savings plan. As such, any earnings or gains on the investments would not face state taxes.

The tax-free proceeds can used for a down payment or closing costs on their first home purchase in the state.

The Virginia Association of REALTORS® championed the legislation, known as First-Time Homebuyer Savings Plans, to “help Virginians prepare for home ownership, remind them how important it is, and improve the long-term health of the housing market.”

Under the law, the maximum principal investment is $50,000. The account can increase in value up to $150,000.

“The need for these plans has become clear,” says VAR president Bradley Boland. “Issues such as tighter mortgage loan requirements and increasing student debt are making it more difficult for young adults to enter the world of home ownership. We knew we needed to be proactive. We needed to help people not only understand the expense of buying a home, but prepare for it as well. This bill is one way we are supporting the housing market, and maybe smoothing some of the speed bumps on the road to home ownership.”

Source: “Virginia Launches Investment Plan to Spur First-Time Homebuyers,” HousingWire (July 1, 2014)