Questions & Answers

What is the First-Time Home Buyer Savings Accounts subtraction?

Code: 54

To the extent included in federal adjusted gross income, an individual may subtract any income attributable to a first-time home buyer savings account that was taxed as interest, capital gains, or other income for federal income tax purposes.

Distributions from a first-time home buyer savings account may only be used for the purpose of paying or reimbursing the down payment and allowable closing costs for the purchase of a single-family residence in Virginia by a qualified beneficiary. The subtractions claimed by an account holder in all prior taxable years are subject to recapture in the taxable year in which account funds are withdrawn for any other purpose even if the withdrawal occurred after the expiration of Virginia's three-year statute of limitations.

To claim the subtraction, an individual must designate an account as a first-time home buyer savings account. An individual may designate an account by submitting an attachment with their Virginia income tax return for the first taxable year in which such individual claims the subtraction. An individual must submit a separate attachment for each account that he or she is designating. The attachment must include the following information:

  • The name and address of the financial institution that maintains the account;
  • The names of any other individuals with an ownership interest in the account;
  • The account number or other account identifier;
  • The type of principal (cash or marketable securities) contributed to the account as of the last day of the taxable year;
  • The amount of principal and interest in the account as of the last day of the taxable year;
  • The amount of any withdrawals from the account during the taxable year; and
  • The account beneficiary or beneficiaries.
After designating an account as a first-time home buyer savings account, the account holder is required to include an attachment with updated information for the account for all future taxable years in which he or she is required to file a Virginia income tax return. If an account holder has designated more than one existing first-time home buyer savings account, the account holder is required to submit a separate attachment with updated information for each account. More information is available in the First-Time Home Buyer Savings Account Guidelines .

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