Oregon allows a subtraction for amounts you deposited during the tax year into a designated first-time home buyer savings account (FTHBSA), along with any earnings on your deposits.
An FTHBSA can be opened any time between January 1, 2019 and December 31, 2026. Money deposited in the account must be used to pay qualifying costs of buying a single-family home within 10 years of opening the account.
You must use your FTHBSA funds to pay costs associated with buying a home, such as:
- Down payment
- Title insurance and other closing costs
- Realtor commissions
- Appraisal and inspection fees
- Loan origination fees
Up to $5,000 in deposits and earnings for the year may be subtracted by an individual filer each year up to $10,000 each year if you're filing a joint return for up to ten years or an aggregate total of $50,000. The maximum subtraction amount is limited by your federal AGI .
For more information about the FTHBSA program, contact a participating Oregon financial institution. For help locating a participating institution, visit the Oregon Association of Realtors' website at www.oregonrealtors.org.
Frequently asked questions
A first-time home buyer account can be set up by anyone planning to purchase a home in Oregon. Individuals have 10 years from when the account is opened to purchase a home. The first-time home buyer account must be opened between January 1, 2019 and December 31, 2026. In addition, the person can't have owned or purchased a residence in the three years prior to the date of their planned purchase.
Yes. If you don't purchase a home in Oregon, you don't qualify for the subtraction and you will be required to add back any amounts you subtracted on previous tax returns. You may also be subject to a penalty on funds withdrawn for a non-qualifying purpose.
Yes. You must be a resident of Oregon.
The maximum subtraction allowed is $5,000 per year ($10,000 if you file a joint return and both you and your spouse have a First-time Home Buyer Savings Account, or you are both owners of a joint account). You may not subtract more than $50,000 in all tax years. Income limitations do apply. If your income is more than $104,000 ($149,000 for joint filers), the amount of the subtraction is reduced. Please see Publication OR-17 for details.
You can subtract both your contributions to the First-time Home Buyer Savings Account and earnings from that account (interest and dividends) up to the annual limitations. However, if your earnings and contributions exceed the annual limitations allowed, you must report the excess earnings on your Oregon return.
You're allowed to transfer the funds in any first-time home buyer account to any other first-time home buyer account without reporting it as income or incurring a penalty. The original first-time home buyer account must be closed before you can open the second account and the funds must be transferred within 60 days of closing the original account. You can't have two first-time home buyer accounts open at the same time.
You're allowed to transfer funds in any first-time home buyer account to any other first-time home buyer account(s) without reporting it as income or incurring a penalty.
Individuals are allowed a subtraction of up to $5,000 per year if they own a First-time Home Buyer Savings Account. The $5,000 limit includes contributions made to the account, plus any earnings the account accumulates over the calendar year. Individuals, who file a joint return and have either a joint first-time home buyer account or each have their own first-time home buyer account, qualify for a maximum $10,000 subtraction per year.
Yes. However, they won't be able to claim a subtraction for any funds they contribute to you. In addition, you won't be able to claim a subtraction for contributions you don't personally make. You will be able to claim a subtraction for any earnings (interest or dividends) in the account.
Funds in your first-time home buyer account can be used for down payments, loan origination charges, appraisal fees, credit report fees, flood certifications, title charges, deed charges, and other closing costs on your settlement statement when purchasing a single-family home.
The funds in the account must be used to purchase a home within 10 years of opening a First-time Home Buyer Savings Account. If funds are withdrawn within 10 years of opening the account for a reason other than buying a home, you will be required to pay a penalty. In addition, if you remove the funds at any time without purchasing a home, you'll need to claim the amounts you previously subtracted as an addition on your tax return. The addition to your income occurs in the year that you removed the funds from the first-time home buyer account for a nonqualifying purpose (for example, you remove the funds to pay for college tuition).
The penalty is 5 percent of the funds withdrawn from the FTHBSA within 10 years of opening the account and used for an unrelated purpose, even if they aren't subtracted on a return. You must also add back any amount that was subtracted on an earlier return when you file your return for the year of the withdrawal.
For example, in calendar year 2022, you contributed $5,000 to an FTHBSA and claimed the maximum subtraction on your 2022 return for your contributions. The account earned $60 in interest in 2022, which couldn't be subtracted because the total contributions and interest was more than the maximum amount. In 2023, you withdraw all $5,060 ($5,000 + $60) from your FTHBSA and use it to pay for college tuition. You must pay a penalty of 5 percent of the total amount withdrawn, or $253 ($5,060 x 5%), when you file your 2023 return. You must also add back $5,000 on your 2023 return for the subtraction you claimed.
Yes. The penalty won't be imposed on funds that are withdrawn if a person has died, has filed for protection under the U.S. Bankruptcy Code, or has lost function of any portion of the body that permanently incapacitates them from regularly performing work at a gainful occupation. Also, if the funds are withdrawn more than 10 years after the account is opened, they won't be subject to a penalty. However, you'll still be required to add back any previously subtracted contributions and earnings.
Yes. Although deposits and earnings to the first-time buyer account are exempt from state taxes up to the annual limit, they're still subject to federal taxes, depending on your individual tax situation.
Amounts contributed can't be carried forward to the next tax year if you weren't able to use the subtraction or you reached the maximum amount allowed.