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Missouri First-Time Homebuyer Savings Account

As of January 1, 2019, Missouri residents can open a First-Time Homebuyer Savings Account and deduct the contributions to that account on their income tax returns.

 

Who is considered a First-Time Homebuyer?

A ‘first-time homebuyer” is an individual who has never owned a home or a divorced individual that has not been listed on the title/deed for at least three consecutive years.

 

What are the advantages of opening a MO First-Time Homebuyers Saving Account?

  • This account allows you to deduct 50% of your contributions to the savings account each tax year.
  • Interest earnings are not taxable.

 

What you need to know about the account.

  • The maximum annual deduction is $800 for an individual and $1,600 for a married couple filing jointly.
    • The deduction cannot exceed the taxpayer’s Missouri adjusted gross income for the tax year.
  • Maximum eligible contributions, per yer, to the account are $1,600 for an individual and $3,200 for a married couple filing jointly.
  • Maximum eligible contributions for all tax years is $25,000.
  • Maximum total balance in the account is $50,000.
  • An individual or couple opening the savings account must designate a qualified beneficiary by April 15th of the year following the date the account was opened.
  • To qualify for the tax benefit, the Account holder is responsible for maintaining any documentation of deposits and expenditures for the account.
    • The financial institution does not hold any liability, especially if funds are not used properly.
  • You will lose your exemption if you withdraw money from the account if you made your first deposit into the account less than a year earlier or use the money for ineligible expenses.

 

What are Eligible Expenses or Withdrawals?

  • Expenses to buy a primary residence in Missouri.
  • Expenses to buy a primary residence outside Missouri for an active-duty military person stationed in Missouri anytime after account creation.
  • Expenses that would have qualified under one of the previous provisions, except that the contract for the purchase did not close.
  • Transfer to another newly created first-time homebuyer savings account.
  • Service fees on the account (which we don’t have any).