CHAPTER 541BIOWA FIRST-TIME HOMEBUYER SAVINGS ACCOUNT ACTReferred to in 669.14
541B.1Short title.
541B.2Definitions.
541B.3First-time homebuyer savings account.
541B.4Account administration account holder responsibilities.
541B.5Financial institution protections.
541B.6Tax considerations.
541B.7Rules and forms.
541B.1Short title.This chapter may be cited as the “Iowa First-Time Homebuyer Savings Account Act”.2017 Acts, ch 116, §3541B.2Definitions.As used in this chapter, unless the context otherwise requires:1.  “Account holder” means an individual who establishes, either individually or jointly with the individual’s spouse, a first-time homebuyer savings account pursuant to section 541B.3.2.  “Department” means the department of revenue.3.  “Designated beneficiary” means an individual meeting the requirements of section 541B.3, subsection 2, and designated by an account holder as beneficiary of the account holder’s first-time homebuyer savings account pursuant to section 541B.3, subsection 2.4.a.  “Eligible home costs” means the following:(1)  The down payment for the purchase of a single-family residence in Iowa by a designated beneficiary.(2)  A cost, fee, tax, or payment incurred by, or charged or assigned to, a designated beneficiary for the purchase of a single-family residence in Iowa, and listed on the statement of receipts and disbursements for the sale, including any statement prescribed by 12 C.F.R.§1026.38, as amended.b.  “Eligible home costs” includes any United States veterans administration funding fee incurred by, or charged or assigned to, a designated beneficiary in connection with a veterans administration home loan guaranty program.5.  “Financial institution” means a state or federally chartered bank, savings and loan association, credit union, or trust company in this state.6.  “First-time homebuyer” means an individual who is a resident of Iowa and who does not own, either individually or jointly, a single-family or multifamily residence, and who has not owned or purchased, either individually or jointly, a single-family or multifamily residence for a period of three years prior to all of the following:a.  The date on which the individual is named as a designated beneficiary of a first-time homebuyer savings account.b.  The date of the qualified home purchase for which the eligible home costs are paid or reimbursed from a first-time homebuyer savings account.7.  “First-time homebuyer savings account” means an account that meets the requirements of sections 541B.3 and 541B.4 and that was established for the purpose of paying or reimbursing a designated beneficiary’s eligible home costs in connection with a qualified home purchase.8.  “Individual” means a natural person.9.  “Qualified home purchase” means, with respect to a first-time homebuyer savings account, the purchase of a single-family residence in Iowa by the account’s designated beneficiary ninety or more days after the date the account holder first opened a first-time homebuyer savings account.10.  “Resident” means the same as defined in section 422.4.11.  “Single-family residence” means a single-family residence owned and occupied by a designated beneficiary as the designated beneficiary’s principal residence, including but not limited to a manufactured home, mobile home, condominium unit, or cooperative.2017 Acts, ch 116, §4Referred to in 422.7, 422.9541B.3First-time homebuyer savings account.1.Establishment of account.a.  Beginning January 1, 2018, an individual may open an interest-bearing savings account with a financial institution and designate the entire account as a first-time homebuyer savings account for the purpose of paying or reimbursing a designated beneficiary’s eligible home costs in connection with a qualified home purchase. The first-time homebuyer savings account designation shall be made no later than April 30 of the year following the tax year during which the account is opened, on forms provided by the department.b.  A married couple electing to file a joint Iowa individual income tax return may establish a joint first-time homebuyer savings account. Married taxpayers electing to file separate tax returns or separately on a combined tax return for Iowa tax purposes shall not establish or maintain a joint first-time homebuyer savings account.c.  An individual may establish more than one first-time homebuyer savings account, provided each account has a different designated beneficiary.2.Designation of beneficiary.a.  The account holder shall designate one individual as beneficiary of the first-time homebuyer savings account. The designation shall be made on forms provided by the department and no later than April 30 of the year following the tax year during which the account is opened. The account holder may change the designated beneficiary of the first-time homebuyer savings account at any time.b.  The account holder and designated beneficiary of a first-time homebuyer savings account may be the same individual.c.  An individual may be the designated beneficiary of more than one first-time homebuyer savings account.d.  The designated beneficiary of a first-time homebuyer savings account must be a first-time homebuyer.2017 Acts, ch 116, §5Referred to in 541B.2, 541B.7
For future amendment to subsection 1, paragraph b, effective on or after January 1, 2023, contingent upon meeting certain net general fund revenue criteria, see 2018 Acts, ch 1161, §131, 133, 134
541B.4Account administration account holder responsibilities.1.Account contributions.Contributions to a first-time homebuyer savings account may be made by any person in the form of cash. There is no limitation on the amount of contributions that may be made to or retained in a first-time homebuyer savings account.2.Account expenses.The account holder shall not use funds held in a first-time homebuyer savings account to pay expenses, if any, of administering the account, except that all fees and charges assessed by the financial institution may be deducted from the account by the financial institution where the account is held.3.Required reports.The account holder shall submit the following information to the department: a.  An annual report for the first-time homebuyer savings account on forms furnished by the department. The report shall be included with the Iowa income tax return of the account holder.b.  A copy of the federal internal revenue service form 1099, or other similar federal internal revenue service income reporting form, if any, issued for the first-time homebuyer savings account to the account holder by the financial institution where the account is held. The form shall be included with the Iowa income tax return of the account holder.c.  Upon a withdrawal of funds from a first-time homebuyer savings account, a transaction report on forms furnished by the department.4.Withdrawal of funds.The account holder may withdraw funds from a first-time homebuyer savings account at any time.2017 Acts, ch 116, §6Referred to in 541B.2, 541B.7541B.5Financial institution protections.Nothing in this chapter shall be construed to require a financial institution to do any of the following, or to be responsible or liable for any of the following:1.  Designate or label within the financial institution’s account contracts, systems, or in any other manner, an account as a first-time homebuyer savings account.2.  Ascertain or verify the purpose of a withdrawal of funds from a first-time homebuyer savings account, or track the destination or use of the withdrawn funds.3.  Allocate funds in a first-time homebuyer savings account to a designated beneficiary or among joint account holders. 4.  Report any information to the department or any other governmental agency.5.  Determine or ensure that an account satisfies the requirements to be a first-time homebuyer savings account.6.  Determine or ensure that funds withdrawn from a first-time homebuyer savings account are used for the payment or reimbursement of a designated beneficiary’s eligible home costs in connection with a qualified home purchase.7.  Report or remit taxes or penalties related to the ownership or use of a first-time homebuyer savings account.8.  Include the name of a beneficiary in the title of a first-time homebuyer savings account, or document the change of any beneficiary to a first-time homebuyer savings account.2017 Acts, ch 116, §7541B.6Tax considerations.The state income tax treatment of a first-time homebuyer savings account shall be as provided in section 422.7, subsection 41, and section 422.9, subsection 2, paragraph “k”.2017 Acts, ch 116, §8
For future amendment to this section, effective on or after January 1, 2023, contingent upon meeting certain net general fund revenue criteria, see 2018 Acts, ch 1161, §132 – 134
541B.7Rules and forms.1.  The department shall adopt rules to implement and administer this chapter.2.  The department shall create and make available forms to be used in complying with this chapter, including but not limited to the following: a.  A form for designating an account as a first-time homebuyer savings account pursuant to section 541B.3, subsection 1, paragraph “a”.b.  A form for designating an individual as beneficiary of a first-time homebuyer savings account pursuant to section 541B.3, subsection 2, paragraph “a”.c.  A first-time homebuyer savings account annual report as required in section 541B.4, subsection 3, paragraph “a”. The report shall require, at a minimum, a list of transactions occurring on the account during the tax year, and shall identify any supporting documentation to be included with the report or maintained by the taxpayer.d.  A transaction report as required in section 541B.4, subsection 3, paragraph “c”, which report shall require, at a minimum, information regarding the eligible home costs to which any withdrawn funds were applied in connection with a qualified home purchase, and information regarding the amount of funds remaining, if any, in a first-time homebuyer savings account.2017 Acts, ch 116, §9