Account overview

First-Time Homebuyer
Savings Account

Equal Housing Lender
 

Here's how it works.


Account Purpose

A FTHSA is a special type of savings account created by the Iowa legislature to help Iowans save for their first homes. It includes provisions that allow individuals, including those who already own a home, to make tax-deductible contributions into an account to be used by a designated person saving to own a first home.

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Account Benefits

A first-time homebuyer savings account has several benefits including:

  • The account is interest bearing.
  • Account holders may exclude from their Iowa adjusted gross income yearly deposits into First-time Homebuyer Savings Accounts (FTHSA) in amounts up to $2,000 a year. Married taxpayers who file a joint return may exclude up to $4,000 a year if the account is opened and maintained as a joint account.
  • Income from interest earned on a FTHSA is not taxable on state of Iowa tax returns.
  • There are no maximum deposit limits.
  • The state of Iowa tax deduction for account contributions is available for up to ten years.
  • Allowable deduction limits for contributions adjust annually for inflation.



Account Owner Responsibilities

You are responsible for designating a beneficiary of the account and for ensuring the beneficiary's eligibility as a first-time homebuyer, ensuring that the funds are withdrawn in connection with a qualified home purchase, and for keeping receipts and records to support the account's contributions and distributions. The law indicates:

  • Account holders are responsible to indicate that they are the account holder and designate an individual as beneficiary of a first-time homebuyer savings account.
  • Account holders are responsible to fill out an Iowa department of revenue annual report form and include it with their Iowa income tax return.
  • Account holders are responsible to submit a copy of IRS form 1099 if provided with their Iowa income tax return.
  • Account holders are responsible to provide a transaction report to the Iowa Department of Revenue when funds are withdrawn. This form must be submitted to the Iowa Department of Revenue within ninety (90) days of the date of any withdrawal of funds in any amount from the first-time homebuyer account.

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Frequently Asked Questions

Contact a TSB team member for more information.

  (800) 920-2085

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