MINNESOTA INTRODUCES FIRST TIME HOMEBUYERS SAVINGS ACCOUNTS
By Anthony SanFilippo
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.
Minnesota residents can now open a dedicated savings account for the purchase of a first home regardless of income.
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.