Mark Kamps says a bill signed into law last year allows individuals or couples to save money in a tax-deductible savings account to go toward the purchase of a home.
“So, first-time buyers or any buyer who hasn’t owned a home in the previous three years are going to be able to put away $2,000 per year, for an individual, for a maximum of 10 years,” Kamps said. “If it’s a married couple, they can put away up to $4,000 per year for a 10-year time period.”
There’s no limit on annual contributions to a First Time Home Savings Account, but tax deductions are capped at contribution totals of $4,000 for married joint filers and $2,000 for all other filers.
“Our hope is that’ll help young people get started saving toward that first purchase and encourage them to do so, so they’ll have a down payment when the time comes,” Kamps said. The new program is similar to the popular College Savings Iowa program. Kamps notes contributions can be made to a First Time Home Savings Account for up to 10 years, though he doubts most people looking to purchase their first home will wait that long.
“But, parents or grandparents could start putting away money for their children to purchase a home in 10 years. That way, they could get the tax deduction for that time period, as long as their child purchases a house in the State of Iowa,” Kamps said.