A home savings account is a savings product whose contributions are for the purpose of acquiring or rehabilitating a home.
The main objective of a home savings account is the purchase or rehabilitation of a house. Buying a house usually involves the largest outlay of money that a person makes in his life. Given the amount of a house, it is very common to request a loan from the bank. This loan is what we know as a mortgage due to its characteristics. Of course, if the value of the house is, say, 100,000 euros, the bank does not offer 100,000 euros. Always offer less. Therefore, the difference between the loan and the price of the house to be purchased must be provided as an input.
That is, the house is worth 100,000 euros and the bank lends me 80,000 euros. Therefore, in order to buy the house I must contribute 20,000 euros (the entrance fee). The objective of the housing savings account is to obtain these 20,000 euros. For this, this product is fiscally configured to make the purchase of a home or the rehabilitation of the habitual residence easier.
Characteristics of a home savings account
Although the operation is similar to that of a checking account, the home savings account has the following characteristics:
- Contributions to this account must be used solely and exclusively for the purchase of a home or the rehabilitation of the habitual residence. Otherwise, the owner of the account must return the tax benefits associated with it.
- Depending on the legislation, it represents a tax saving on the contribution. This tax saving has limits in order to help those most in need, not big capital.
- It usually offers more attractive returns (including tax incentives) than a checking account or a traditional deposit.
- The interests generated by the home savings account, usually have the same tax treatment as those generated by a deposit.
- It is aimed mainly at the youngest.
- Its existence depends on the financing conditions to which the entities that offer it are subject and the current legislation.
Criticisms of the housing savings account
Although it is a measure that tries to help those who do not have enough savings, some experts believe that it does not really help buyers. The State assumes that it will receive less tax income (due to deductions from the housing savings accounts), but in return the owners of said accounts will have more facilities to acquire a home. However, some experts indicate that developers are aware of this benefit and increase prices based on disposable income.
In other words, from a theoretical point of view we would have to assume that supply remains constant, as demand increases (thanks to the fact that people can buy a home more easily), prices rise.