HF 1234 Summary

• Establishes a first-time home buyer savings account program allowing individuals to open accounts with financial institutions to save for down payments and closing costs on Minnesota single-family residences.

• Allows account holders a state income tax subtraction of up to $5,000 annually ($10,000 for married couples filing jointly) for contributions to the account, plus earnings, for ten taxable years after account establishment, with a lifetime limit of $50,000 per qualified beneficiary.

• Requires account holders to add back to taxable income any non-qualifying withdrawals and any remaining funds after ten years, plus pay an additional 10 percent tax penalty on those amounts, with exceptions for withdrawals due to death, disability, or bankruptcy.

• Limits income tax subtraction for high earners, reducing the maximum subtraction by $1 for every $4 of adjusted gross income exceeding $125,000 (or $250,000 for married joint filers), with annual inflation adjustments.

• Appropriates unspecified amounts from the general fund for fiscal years 2018 and 2019 to the commissioner of revenue to administer the program.