Our main goal is helping customers achieve their financial goals, and homeownership is often chief among those goals. In 2017, Iowa Legislature passed a law that created a new income tax credit for first-time homebuyers. The tax credit can be accessed through the use of a homebuyer savings account, which can be set up and maintained at United Bank & Trust. To qualify for the tax deduction, the homebuyer must be a first-time homeowner who has not previously owned – either individually or jointly – a single or multifamily residence in the previous three years.
Here's how it works:
- Open a United Bank & Trust Savings Account. The account must be labeled as a First-Time Homebuyer savings account
- You can make unlimited deposits each year to the homebuyer savings account
- The income tax deduction is limited to $2,181 per year when filing individually and $4,363 per year when filing jointly
- Interest earned on account balances is exempt from state income tax
- Accounts can be opened with the account holder as the beneficiary of the funds or another person can be named as beneficiary. For example, a parent could open an account in his/her name and name a child as the beneficiary. The designated beneficiary must be a first time homebuyer.
- The maximum amount that qualifies for the exemption will be adjusted annually for inflation
- The money within an account is available for up to 10 years to be used for the qualifying purchase costs of a single-family residence
For additional information provided by the Iowa Department of Revenue, click here. Please consult your tax advisor for additional tax related questions.