2019 Minnesota Statutes

CHAPTER 462D. FIRST-TIME HOME BUYER SAVINGS ACCOUNT ACT

462D.01 CITATION.

This chapter may be cited as the "First-Time Home Buyer Savings Account Act."

History:

1Sp2017 c 1 art 1 s 36

462D.02 DEFINITIONS.

Subdivision 1.Definitions.

For purposes of this chapter, the following terms have the meanings given.

Subd. 2.Account holder.

"Account holder" means an individual who establishes, individually or jointly with one or more other individuals, a first-time home buyer savings account.

Subd. 3.Allowable closing costs.

"Allowable closing costs" means a disbursement listed on a settlement statement for the purchase of a single-family residence in Minnesota by a qualified beneficiary.

Subd. 4.Commissioner.

"Commissioner" means the commissioner of revenue.

Subd. 5.Eligible costs.

"Eligible costs" means the down payment and allowable closing costs for the purchase of a single-family residence in Minnesota by a qualified beneficiary. Eligible costs include paying for the cost of construction of or financing the construction of a single-family residence.

Subd. 6.Financial institution.

"Financial institution" means a bank, bank and trust, trust company with banking powers, savings bank, savings association, or credit union, organized under the laws of this state, any other state, or the United States; an industrial loan and thrift under chapter 53 or the laws of another state and authorized to accept deposits; or a money market mutual fund registered under the federal Investment Company Act of 1940 and regulated under rule 2a-7, promulgated by the Securities and Exchange Commission under that act.

Subd. 7.First-time home buyer.

"First-time home buyer" means an individual, and if married, the individual's spouse, who has no present ownership interest in a principal residence during the three-year period ending on the earlier of:

(1) the date of the purchase of the single-family residence funded, in part, with proceeds from the first-time home buyer savings account; or

(2) the close of the taxable year for which a subtraction is claimed under sections 290.0132, subdivision 25, and 462D.06.

Subd. 8.First-time home buyer savings account.

"First-time home buyer savings account" or "account" means an account with a financial institution that an account holder designates as a first-time home buyer savings account, as provided in section 462D.03, to pay or reimburse eligible costs for the purchase of a single-family residence by a qualified beneficiary.

Subd. 9.Internal Revenue Code.

"Internal Revenue Code" has the meaning given in section 290.01.

Subd. 10.Principal residence.

"Principal residence" has the meaning given in section 121 of the Internal Revenue Code.

Subd. 11.Qualified beneficiary.

"Qualified beneficiary" means a first-time home buyer who is a Minnesota resident and is designated as the qualified beneficiary of a first-time home buyer savings account by the account holder.

Subd. 12.Single-family residence.

"Single-family residence" means a single-family residence located in this state and owned and occupied by or to be occupied by a qualified beneficiary as the qualified beneficiary's principal residence, which may include a manufactured home, trailer, mobile home, condominium unit, townhome, or cooperative.

History:

1Sp2017 c 1 art 1 s 37

462D.03 ESTABLISHMENT OF ACCOUNTS.

Subdivision 1.Accounts established.

An individual may open an account with a financial institution and designate the account as a first-time home buyer savings account to be used to pay or reimburse the designated qualified beneficiary's eligible costs.

Subd. 2.Designation of qualified beneficiary.

(a) The account holder must designate a first-time home buyer as the qualified beneficiary of the account in a form and manner prescribed by the commissioner following the taxable year in which the account was established. The account holder may be the qualified beneficiary. The account holder may change the designated qualified beneficiary at any time, but no more than one qualified beneficiary may be designated for an account at any one time. For purposes of the one beneficiary restriction, a married couple qualifies as one beneficiary. Changing the designated qualified beneficiary of an account does not affect computation of the ten-year period under section 462D.06, subdivision 2.

(b) The commissioner shall establish a process for account holders to notify the state that permits recording of the account, the account holder or holders, any transfers under section 462D.04, subdivision 2, and the designated qualified beneficiary for each account. This may be done upon filing the account holder's income tax return or in any other way the commissioner determines to be appropriate.

Subd. 3.Joint account holders.

An individual may jointly own a first-time home buyer account with another person if the joint account holders file a married joint income tax return.

Subd. 4.Multiple accounts.

(a) An individual may be the account holder of more than one first-time home buyer savings account, but must not hold or own multiple accounts that designate the same qualified beneficiary.

(b) An individual may be designated as the qualified beneficiary on more than one first-time home buyer savings account.

Subd. 5.Contributions.

Only cash may be contributed to a first-time home buyer savings account. Individuals other than the account holder may contribute to an account. No more than $14,000 ($28,000 for married joint filers) may be contributed in any year and no more than $50,000 ($100,000 for married joint filers) may be contributed in all years. The maximum amount in any account is limited to $150,000.

History:

1Sp2017 c 1 art 1 s 38; 1Sp2019 c 6 art 13 s 3

462D.04 ACCOUNT HOLDER RESPONSIBILITIES.

Subdivision 1.Expenses; reporting.

The account holder must:

(1) not use funds in a first-time home buyer savings account to pay expenses of administering the account, except that a service fee may be deducted from the account by the financial institution in which the account is held; and

(2) submit to the commissioner, in the form and manner required by the commissioner:

(i) detailed information regarding the first-time home buyer savings account, including a list of transactions for the account during the taxable year and the Form 1099 issued by the financial institution for the account for the taxable year; and

(ii) upon withdrawal of funds from the account, a detailed account of the eligible costs for which the account funds were expended and a statement of the amount of funds remaining in the account, if any.

Subd. 2.Transfers.

An account holder may withdraw funds, in whole or part, from a first-time home buyer savings account and deposit the funds in another first-time home buyer savings account held by a different financial institution or the same financial institution.

History:

1Sp2017 c 1 art 1 s 39

462D.05 FINANCIAL INSTITUTIONS.

(a) A financial institution is not required to take any action to ensure compliance with this chapter, including to:

(1) designate an account, designate qualified beneficiaries, or modify the financial institution's account contracts or systems in any way;

(2) track the use of money withdrawn from a first-time home buyer savings account;

(3) allocate funds in a first-time home buyer savings account among joint account holders or multiple qualified beneficiaries; or

(4) report any information to the commissioner or any other government that is not otherwise required by law.

(b) A financial institution is not responsible or liable for:

(1) determining or ensuring that an account satisfies the requirements of this chapter or that its funds are used for eligible costs; or

(2) reporting or remitting taxes or penalties related to the use of a first-time home buyer savings account.

History:

1Sp2017 c 1 art 1 s 40

462D.06 SUBTRACTION; ADDITION; ADDITIONAL TAX.

Subdivision 1.Subtraction.

(a) As provided in section 290.0132, subdivision 25, an account holder is allowed a subtraction from federal adjusted gross income equal to interest or dividends earned on the first-time home buyer savings account during the taxable year.

(b) The subtraction under paragraph (a) is allowed each year for the taxable years including and following the taxable year in which the account was established. No person other than the account holder is allowed a subtraction under this section.

Subd. 2.Addition.

(a) As provided in section 290.0131, subdivision 14, an account holder must add to federal adjusted gross income the following amounts:

(1) the amount in excess of the total contributions for all taxable years that is withdrawn and used for other than eligible costs, or for a transfer permitted under section 462D.04, subdivision 2; and

(2) the amount remaining in the first-time home buyer savings account at the close of the tenth taxable year that exceeds the total contributions to the account for all taxable years.

(b) For an account that received a transfer under section 462D.04, subdivision 2, the ten-year period under paragraph (a), clause (2), ends at the close of the earliest taxable year that applies to either account under that clause.

Subd. 3.Additional tax.

The account holder is liable for an additional tax equal to ten percent of the addition under subdivision 2 for the taxable year. This amount must be added to the amount due under section 290.06. The tax under this subdivision does not apply to:

(1) a withdrawal because of the account holder's or designated qualified beneficiary's death or disability;

(2) a disbursement of assets of the account under federal bankruptcy law; and

(3) a disbursement of assets of the account under chapter 550 or 551.

History:

1Sp2017 c 1 art 1 s 41; 1Sp2019 c 6 art 1 s 69,70