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Last Updated: 8/29/2017

First-time Homebuyer Savings Account

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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.
 
Visit our website in January 2018 for tax year 2017 forms and instructions.
 

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.

How do I report this addition?

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. Visit our website in January 2018 for tax year 2017 forms and instructions.