Minnesota Introduces First Time Homebuyers Savings Accounts

The Minnesota legislature recently passed a new law that included the First-Time Homebuyer Savings Account Act, which now allows individuals or couples to save the money they need in a tax-preferred savings account to go toward the purchase of a home.

With this new law, it just got easier for Minnesotans to start saving for their first home.

Not only is it easier to save for a down payment on a first home, contributions will also help cover additional closing costs, taxes and fees associated with buying a home.

Because now you can save the money you need for such an important life investment in a tax preferred savings account where the interest and dividends from those funds can be claimed as a state tax deduction.

It’s an initiative to incentivize homeownership, which is the backbone of safe neighborhoods, healthy schools, a consistent labor force and stronger communities, especially here in Minnesota.

In a recovering housing market in the wake of the worst recession in 70 years, a variety of strategies are needed to support and encourage homeownership. Creating this savings account is a great first step.

Here’s five things you need to know about the First-Time Homebuyer Savings Account Act:

• Individuals or couples can establish a dedicated savings account at their local bank or credit union for the purchase of a first home in Minnesota regardless of their income.
• Parents or grandparents can open an account for their children or grandchildren and contribute to those accounts as well.
• Account holders can save up to $150,000 total with interest and dividends. Maximum contributions are set for married joint filers at $100,000 and all other filers at $50,000.
• Annual contributions are capped at $28,000 for married joint filers and $14,000 for all other filers.
• All interest and dividends earned on this account can be claimed as a state income tax deduction.

Contact a Minnesota REALTOR® to learn more.