As most Atlanta readers know, the federal and state governments often design tax codes to help encourage behavior that is good for families and the economy. One way that the government offers a little bit of aid via the tax code is through savings accounts that are not taxed. These accounts might be familiar if you have one through your health insurance plan - known as an HSA (health savings account). A similar account is also available for college tuition savings.

Now, a coalition of interests groups is advocating adding another type of tax-free savings account - one to help potential homebuyers save up for their down payment.

The concept is still in its proposal phase, and is a part of a larger package of policy changes that would benefit home owners and renters. A spokesperson for the group proposing the savings accounts told reporters that it would make help encourage saving for down payments earlier in life and would make it easier for people to purchase a home.

Like a health savings account, these accounts would allow for a certain amount of money to be deducted and deposited before calculating the total income amount that is subject to income taxes. This lowers the total amount of taxable income that a person has. 

While this concept seems fairly sensible to most readers, there are some critics of the proposal who say that there are other more effective ways to encourage people to save for a home, such as matching funds programs. 

What do you think - is this a good way to encourage people to buy homes? 


Source: New York Times, "Tax-Free Accounts for Homes," Lisa Prevost, Aug. 8, 2013.