Minnesota First-time Homebuyer Savings Account Subtraction

Beginning in tax year 2017, individuals may contribute to a first-time homebuyer savings account. The account may be used to save for eligible expenses for a qualified beneficiary.

First-time Homebuyer Savings Account Subtraction

Individuals may subtract interest earned on the first-time homebuyer savings account from their Minnesota taxable income.

When is this subtraction available?

The First-time Homebuyer Savings Account subtraction is available beginning tax year 2017. Individuals may contribute to a first-time homebuyer savings account beginning in 2017.

How much is this subtraction?

The subtraction is limited to the interest earned on an individual’s first-time homebuyer savings account.

How much can I contribute to an account?

Individuals are limited to contributing $14,000 ($28,000 for married filing joint) per year. Individuals cannot contribute more than $50,000 ($100,000 for married filing joint) total in all years. Each account is limited to a maximum of $150,000.

What are eligible expenses?

Eligible expenses include closing costs and the down payment for the purchase of a single-family home, or the cost of construction or financing the construction of a single-family home.

Who is a qualified beneficiary?

Each account must have a designated qualified beneficiary. Qualified beneficiaries must be Minnesota residents that have not had an ownership interest in a principal residence in the previous three years. Also, the spouse of a married beneficiary cannot have an ownership interest in a home.

Do I qualify for this subtraction?

Anyone may establish or contribute to a first-time homebuyer savings account. More information and instructions for establishing and contributing to an account will be available for the 2017 tax filing season.

How do I file this subtraction?

Eligible taxpayers should complete Schedule M1HOME, First-Time Homebuyer Savings Account, to determine this subtraction.

First-time Homebuyer Savings Account Addition

Unqualified withdrawals from a first-time homebuyer savings account may require taxpayers to report an addition to their Minnesota taxable income.

What do I need to report as an addition?

The following items must be reported as an addition to Minnesota taxable income:

Any amount previously reported as a subtraction, withdrawn from the account, and used for anything other than eligible costs.
Account balances exceeding contributions at the close of the tenth year the account is open.
Eligible taxpayers should complete Schedule M1HOME, First-Time Homebuyer Savings Account, to determine this addition.
Visit our website in January 2018 for tax year 2017 forms and instructions.

First-time Home Buyer Savings Account Additional Tax

An additional tax applies in the following situations:

Any amount previously reported as a subtraction, withdrawn from the account, and used for anything other than eligible costs.
Account balances exceeding contributions at the close of the tenth year the account is open.
Taxpayers required to report an addition to their Minnesota taxable income.

How do I report this additional tax?

Eligible taxpayers should complete Schedule M1HOME, First-Time Homebuyer Savings Account, to determine their additional tax

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