LKR Agent guest post by Kim Schillig
Save For Downpayments and Closing Costs Tax-Free
Home Savings Account for First Time Buyers is a dedicated, tax-free savings account program that would offer first-time homebuyers an opportunity to save for downpayments and closing costs tax-free.
For the past two years the Iowa Association of Realtors have championed a bill could make it easier for first time home buyers to invest in real estate as their first home. Often, first time home buyers are challenged to meet the down payment required to qualify for their first home. The legislation creates a new State income tax exemption for qualified deposits to a First-time Homebuyer Savings Account. This would allow prospective first-time homebuyers to save money to help pay for closing costs or a downpayment on a home in Iowa.
There are some limitations – the money can be used only for the downpayment and/or for closing costs and there is an annual maximum amount of $2000 for individuals or $4000 for couples.
This legislation passed both houses and was signed by the Governor; Home Savings Accounts would be available in the 2018 tax year. Check with your local financial institution about setting up an account for 2018.
The Home Savings Account for First Time Buyers is a dedicated, tax-free savings account program that would offer first-time homebuyers the following:
- Maximum deposit up to $2,000 ($4,000 for couples) of after-tax dollars annually.
- State income tax deduction for contributions to the account for the individuals making the deposit.
- Apply the savings in the account and any earned interest toward the purchase or construction of a first home in Iowa. This can be a mobile home, condominium, cooperative, or single family home.
- Anyone can make a contribution to these accounts for any individual or couple. This means contributions could be made as graduation gifts, wedding gifts, or any reason from anyone to the Buyer, subject to the annual maximum listed above.
If you or someone you know would like to know more about this new legislation, please call me; I’d love to talk with you about it!
Kim Schillig, | REALTOR®