The Iowa House has voted to create new tax credits for Iowans who are saving money to cover a downpayment and closing costs on their first home.
“It’s as simple as this, folks: it’s never a bad idea to leave more of the taxpayers’ money in their own pocket where they can invest it better than what we can down here in Des Moines,” says Representative Matt Windschitl, a Republican from Missouri Valley.
Any interest earned on an “Iowa First-Time Homebuyers Savings Account” would not be taxed if the bill becomes law, plus individuals could claim a tax credit of up to $3000 per year for money socked away in the account. The tax credit would double to $6000 for a couple saving for their first home. Representative Mary Mascher, a Democrat from Iowa City, voted against the bill. Mascher pointed to the estimate that Iowans will pay four-million dollars less in taxes if this tax credit is offered. She says that would put a squeeze on available state resources for other priorities.
“We need to be cautious about the dollars we are commiting in the state budget to tax deductions or credits,” Mascher says.
Representative Cindy Winckler, a Democrat from Davenport, doubts this tax credit would help low-income Iowans afford a new home.
“This might not be the best use of our $4 million,” Winckler said. “It might be nice to do this, but is it important or necessary?”
The bill passed overwhelming on a 90-7 vote. Representative Tom Sands, a Republican from Wapello, was among the bill’s supporters.
“I don’t see this bill as a long-term drain on Iowa’s economy,” Sands says. “I see it as a stimulation on helping Iowans to to actually thrive within their communities and invigorate their communities.”
Sands argues first-time homeowners typically have to fix up their new property, creating ripple effects with the purchase of goods like paint and hardware for the home and the hiring of local painters, plumbers and carpenters to do the work.
This proposal now goes to the Iowa Senate for consideration.