ISSUE 3

Improving the “First-Time Home Buyer Savings Account Act”

In 2017, MN REALTORS® proposed the “First-Time Home Buyer Savings Account Act” (the Act).  The Act was included in the Special Session omnibus tax bill and signed into law

The objective of the Act was to provide Minnesotans who want to become homeowners with tax incentives to save for the purchase of a first home. It also provided an incentive for parents and grandparents to help their children and grandchildren save for the purchase of a first home.

Unfortunately, the version of the Act that was signed into law did not include the most significant tax incentive in the bill, as proposed: Allowing contributions to first-time home buyer savings accounts to be claimed as a subtraction from taxable income.

Instead, only the interest or dividends earned on the account can currently be claimed as a subtraction from taxable income.

This bill would improve the Act by:

  • Allowing contributions to first-time home buyer savings accounts to be claimed as a subtraction from taxable income (not to exceed $5,000 or $10,000 for married joint filers), as was originally proposed in 2017

  • Creating a tax incentive for an employer to voluntarily contribute to an employee’s first-time home buyer savings account

Authors

SF ­­­1406 - Senator Housley