New deduction for home savings starts with 2020 returns
If you contributed to a First-Time Home Buyers (FTHB) savings account last year, you can claim a deduction on your Idaho income tax return for 2020.
Contributions to the account are deductible. You also can deduct the interest earned if you included it as income on your federal return.
- An individual can deduct up to $15,000 each year on their Idaho income tax return.
- A married couple filing jointly can deduct up to $30,000 each year on their Idaho return.
You’ll need to track your contributions each year to determine your deduction amount. By January 31, 2021, your financial institution will send you a Form 1099-INT if the account earned interest. You’ll need this form to complete your tax return.
The deduction for the FTHB savings account is only for Idaho returns. You can’t take this deduction on the federal return you file with the IRS.
For more information about the FTHB savings account and deduction, see the Idaho Form 40 and Form 39R instructions.
About the program
The FTHB savings account helps you as an Idaho resident save for your first home. To qualify you can’t have bought or owned a home before, inside or outside Idaho. The home you buy must be in Idaho and be your primary residence.
- To open an account, you must live in Idaho and have filed an Idaho income tax return for the most recent tax year.
- An individual can contribute up to $15,000 per year.
- A married couple filing jointly can contribute up to $30,000 per year.
- Deposits can’t exceed $100,000 over the lifetime of the account, which you must keep at an Idaho financial institution.
- You can’t make any withdrawals within the first 30 days of opening the account.
Withdrawals after 30 days – including accrued interest – aren’t taxable when you use the money to cover eligible costs on a qualifying home purchase. Eligible home costs are:
- The down payment to buy a single-family residence in Idaho.
- A cost, fee, tax, or payment that you owe on a qualifying home purchase.
- Any funding fee from the U.S. Department of Veterans Affairs (VA) that you owe in connection with a home-loan guaranty program from the VA, for a qualifying home purchase.
As described above, you also can claim a deduction on your Idaho income tax return.
For more information about opening an account, contact your financial institution.
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