HB 4289 Summary

• Establishes the Michigan first-time home buyer savings program allowing individuals to open tax-advantaged savings accounts with financial institutions to pay down payments and closing costs on single-family residences.

• Account holders must designate a first-time home buyer (someone who has not owned a home in the prior 3 years) as the qualified beneficiary; maximum account balance is $50,000 and accounts may continue earning interest after reaching the limit.

• Contributions and interest earned on accounts are exempt from state income tax; qualified withdrawals used for eligible costs after the account has been open at least 1 year are also tax-exempt.

• Non-qualified withdrawals are subject to a 10% penalty paid to the department, with exceptions for death, disability, bankruptcy, hardship withdrawals, and active duty military transfers out of state.

• Financial institutions are not required to track account designations, monitor fund usage, or report information to the state beyond standard legal requirements.