BOZEMAN — For those looking to buy a home for the first time, Montana State University Extension has a MontGuide available discussing how Montana law allows individuals to have a special savings account to pay for homebuyer expenses and reduce state income taxes.
According to Marsha Goetting, MSU Extension family economics specialist, as long as the money is left in the first-time homebuyer savings account – or withdrawn for eligible expenses – it is not subject to income taxation at the state level. However, the amount is subject to taxation at the federal level. A person in the 6.9% state income tax bracket could save $207 in taxes each year by opening a first-time homebuyer account.
“The maximum amount that can be used to reduce Montana taxable income, however, is limited to $3,000 annually for each taxpayer,” Goetting added.
First-time homebuyer savings accounts can be established at a state or federally chartered bank, savings and loan establishment, credit union, trust company or mutual fund company or with a brokerage firm. The account must be kept separate from all other accounts and it must be maintained specifically for the purchase of a single-family home by the account holder.
“Money withdrawn from the account is not subject to Montana income taxation if used for eligible costs for the purchase of a single-family residence by a first-time home buyer,” Goetting said. “Examples of eligible expenses include down payment, closing costs, realtor’s fees, appraisal costs, credit history report, points, pro-rated property taxes, home inspections and loan origination fees.”
“First-Time Homebuyer Savings Accounts” can be found at https://store.msuextension.org/publications/FamilyFinancialManagement/MT199918HR.pdf. Paper copies are available at local county or reservation Extension offices.
Reader Comments(0)