Iowans looking to save for a first-time home purchase in the state can now use a first-time homebuyer savings account (FTHSA) to save for their first home.
Benefits of opening an FTHSA include:
- Taxpayers may deduct a portion of money saved from their Iowa adjusted gross income deposits made into their FTHSA
- Married taxpayers who file a joint return may deduct more if the account is opened and maintained as a joint account
- Interest earned from account is not taxable on Iowa tax returns
- Pays a higher dividend rate than regular savings account
- Maximum annual deduction adjusts for inflation
Requirements and rules:
- The contributions are required to be in the account for 90 days prior to being used
- Money remaining in the account more than 10 years after the account was opened is considered withdrawn, and the account can no longer be a first-time homebuyer savings account after that time
- A penalty may be incurred if money is withdrawn for a non-qualified reason
- For complete requirements, rules, and forms visit the Iowa Department of Revenue website
Account Owner of FTHSA is responsible for:
- Designating a beneficiary of the account by submitting an account holder and Designated Beneficiary Form
- Ensuring the beneficiary's eligibility as a first-time homebuyer
- Ensuring that the funds are withdrawn in connection with a qualified home purchase
- Keeping receipts and records to support the account's contributions and distributions
- Submitting the form by the established due date
Note: This page is intended to provide general guidance on the Iowa tax consequences of opening and maintaining an Iowa first-time homebuyer savings account. Please visit the Iowa Department of Revenue website as requirements are subject to change.
Consult your tax preparer for information about how contributions to, and distributions from, an Iowa first-time homebuyer savings account may affect your state or federal taxes.
It's easy to apply for any of these First-Time Homebuyer Savings Account:
Ascentra Members – Within Online Account Access go to the Accounts section, and then click on Open a Sub-Account, then select First-Time Homebuyer under the Savings section and click the Open button. Members without Online Account Access, Enroll Now then apply through the Accounts section.
Not a member? – Go through the Application Center, call 563-355-0152 or 1-800-426-5241, ext. 1, or stop in to any of our convenient locations.