A home savings account is a savings product whose contributions are aimed at acquiring or rehabilitating a home.
The main objective of a housing savings account is the purchase or rehabilitation of a house. The purchase of a house usually involves the largest outlay of money made by a person throughout 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. It always offers less. Therefore, the difference between the loan and the price of the house that is intended to be acquired must be provided as an entry.
That is, the house is worth 100,000 euros and the bank lends me 80,000 euros. Therefore, to be able to buy the house I must contribute 20,000 euros (the entrance). The housing savings account aims to achieve these 20,000 euros. For this, this product is fiscally configured to make it easier to buy a home or to rehabilitate the usual home.
Characteristics of a housing savings account
Although the operation is similar to that of a checking account, the housing savings account has the following characteristics:
- Contributions to this account should be used solely and exclusively for the purchase of a home or for the rehabilitation of the usual home. Otherwise, the account owner must return the tax benefits attached to it.
- Depending on the legislation, it represents a tax saving on the contribution. This tax savings has limits with the objective of helping 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 interest generated by the housing savings account, usually have the same tax treatment as those generated by a deposit.
- It is aimed primarily 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 people 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 revenue (due to deductions from housing savings accounts), but in return the owners of these accounts will have more facilities to acquire a home. However, some experts indicate that promoters are aware of this benefit and increase prices based on disposable income.
That is, from a theoretical point of view we would have to assume that supply remains constant, as demand increases (because people can buy a house more easily), prices rise. Graphically it would look like this: