New law provides income tax deduction for first-time home buyers
July 15, 2020 — A new law allows first-time home buyers in Idaho to save money toward the purchase of a home while reducing how much Idaho individual income tax they owe.
Idahoans who set up a First-Time Home Buyer Savings Account at an Idaho financial institution can claim an income tax deduction on their account contributions and interest earned starting with their Idaho income tax return for 2020. Individuals can deduct up to $15,000 each year. Married couples filing a joint tax return can deduct up to $30,000 a year.
Withdrawals from the account balance – including accrued interest – aren’t taxable when account owners use the money to make a down payment on their first home or to cover other eligible costs related to buying the home. Account owners can’t have previously owned a home.
Financial institutions must report account withdrawals to the Idaho State Tax Commission by using Form ID-FTHB, Beneficiary and Withdrawal Schedule First-time Home Buyer Savings Account. Account deposits can’t exceed $100,000 over the lifetime of the account.
For more information about the new law, see Idaho Code section 63-3022V.