Exciting news for first-time homebuyers!
In May of 2017 the Iowa Legislature approved into law the First-Time Homebuyer Savings Accounts (FTHSA) and they are now available to take advantage of, as of January 1, 2018. This account is a great way to help save for that downpayment and for closing costs on your new home - which we all know is not always the easiest thing to do. Here is a run down of what a FTHSA is and why it is a great thing to consider if homeownership is on your list.
What is a FTHSA?
It is a dedicated, tax-free savings account program that allows first-time homebuyers the chance to save for there downpayment on their home as well as closing costs.
FTHSA details (as stated by the Iowa Association of Realtors):
Creates a new state income tax exemption for qualified deposits to a First-Time Home Buyer Savings Account.
Assets of the savings account are to be used for the down payment and allowable closing costs associated with the purchase of a home.
Withdrawals from the account are tax-free as long as the money is used for a down payment and closing costs for a single-family, owner-occupied home in Iowa.
A first-time home buyer—as well as parents and grandparents of a first-time home buyer—would be able to receive an income tax exemption for savings up to approximately $2,000/year for up to 10 years, or $4,000/year for two first-time home buyers who file taxes jointly, with a maximum of $20,000.
The first-time home buyer is required to set up an account with an Iowa bank or credit union.
For full details on the FTHSA visit https://tax.iowa.gov/legislative-summaries/first-time-homebuyer-savings-accounts