The dream of owning your first home just got closer to reality. Start saving and deduct the interest earned from your Iowa taxes with Farmers Bank's First-Time Homebuyer Savings Account.
Earn 1.00% APY* on your balance or 1.25% APY with monthly direct deposit.
About the Account
A First-Time Homebuyer Savings Account (FTHSA) is a special type of savings account created by the Iowa legislature to help Iowans save for their first homes. This tax-advantaged account applies to first-time homebuyers and those re-entering the housing market, if they have not owned a home within three years. 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. This means that parents, grandparents, or future new homeowners can open a Farmers Trust & Savings Bank First-Time Homebuyer Savings Account.
- The account is interest bearing. Earn 1.00% APY* on your balance or 1.25% APY with monthly direct deposit.
- Account holders may exclude from their Iowa adjusted gross income yearly deposits into FTHSA in amounts up to $2,000 a year individually. 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. Your interest grows tax-free!
- Income from interest earned on a FTHSA is not taxable on state of Iowa tax returns.
- There are no maximum deposit limits. You can deposit money at any time into the interest-bearing savings account.
- The state of Iowa tax deduction for account contributions is available for up to 10 years.
- Allowable deduction limits for contributions adjust annually for inflation.
Account Owner Responsibilities
- Account holders are responsible for designating a beneficiary of the account and for ensuring the beneficiary's eligibility as a first-time homebuyer.
- The beneficiary of the funds must be purchasing their first home within the state of Iowa. The funds can also be transferred to a different beneficiary.
- Account holders are responsible for ensuring that the funds are withdrawn in connection with a qualified home purchase.
- Account holders are responsible for keeping receipts and records to support the account's contributions and distributions.
- 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.
- The account must be opened for a minimum of 90 days and a maximum of 10 years with the funds used towards the purchase of a first home.
- A 10% penalty fee applies to the owner if funds aren't used for a first-time home purchase.
The Iowa Department of Revenue will supply forms for completing these requirements.
*Annual Percentage Yield. APYs effective as of 1/1/18 and subject to change without notice.
$100 minimum opening balance. A minimum balance fee of $5 per statement cycle will be charged if the minimum daily balance is below $100. An excess item fee of $5 will be charged for each debit transaction in excess of six during the statement cycle. Fees may reduce earnings. Not valid with any other special offers.
On January 1 of the tenth calendar year after account opening, this account will convert to a Traditional Savings Account.
Farmers Trust & Savings Bank is not responsible for monitoring or reporting transactional activity on this account, with the exception of interest earned.