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You also may qualify for an income tax credit to reward you for saving
The tax credit can be accessed through the use of a homebuyer savings account, which can be set up and maintained at Peoples Bank. To qualify for the tax deduction, the homebuyer must be a first-time homeowner who has not previously owned – either individually or jointly – a single or multifamily residence in the previous three years. Here’s how it works:
- A qualifying first-time homebuyer savings account must be an interest-bearing savings account and established with a bank, savings and loan association, credit union, or trust company in Iowa.
- The account holder can make unlimited deposits each year to the homebuyer savings account.
- The income tax deduction is limited to $2,050 per year when filing individually and $4,100 per year when filing jointly.
- Accounts can be opened in another person’s name. For example, a parent could open an account and contribute to it as a gift to a child. As long as the funds are used toward the purchase of a first home, it will qualify for the tax deduction.
- The maximum amount that qualifies for the deduction will be adjusted annually for inflation.
- The money within an account is available for up to 10 years to be used for the qualifying purchase costs of a single-family residence.