Effective - 28 Aug 2018
443.1005. Use of account moneys — withdrawals, subject to recapture, when, penalties — death of account holder, effect of. — 1. (1) For purposes of the tax benefit conferred under the first-time home buyer savings account act, the moneys in a first-time home buyer savings account may be:
(a) Used for eligible expenses related to a qualified beneficiary's purchase of his or her primary residence located in this state;
(b) Used for eligible expenses related to a qualified beneficiary's purchase of his or her primary residence located outside this state if the qualified beneficiary is active-duty military and was stationed in Missouri for any time after the creation of the account;
(c) Used for expenses that would have qualified under paragraph (a) or (b) of this subdivision, but the contract for purchase did not close;
(d) Transferred to another newly created first-time home buyer savings account; and
(e) Used to pay a service fee that is deducted by the financial institution.
(2) Subdivision (1) of this subsection* shall apply whether the qualified beneficiary is the sole owner of the primary residence or joint owner with another person who does not qualify as a qualified beneficiary. Moneys in a first-time home buyer savings account shall not be used for the purposes under paragraphs (a), (b), and (c) of subdivision (1) of this subsection related to the purchase of a manufactured or mobile home that is not taxed as real property.
(3) The title of any home purchased with moneys from a first-time home buyer savings account shall not transfer for at least two years unless reasonable circumstances exist that were unforeseen at the time the home was purchased. The first-time home buyer shall request an exception from the department.
2. Moneys withdrawn from a first-time home buyer savings account shall be subject to recapture in the tax year in which they are withdrawn if:
(1) At the time of the withdrawal, it has been less than a year since the first deposit in the first-time home buyer savings account; or
(2) The moneys are used for any purpose other than those specified under subsection 1 of this section.
The recapture shall be an amount equal to the moneys withdrawn and shall be added to the Missouri adjusted gross income of the account holder or, if the account holder is not living, the qualified beneficiary.
3. If any moneys are subject to recapture under subsection 2 of this section, the account holder shall pay to the department a penalty in the same tax year as the recapture. If the withdrawal was made ten or fewer years after the first deposit in the first-time home buyer savings account, the penalty shall be equal to five percent of the amount subject to recapture, and, if the withdrawal was made more than ten years after the first deposit in the account, the penalty shall be equal to ten percent of the amount subject to recapture. These penalties shall not apply if:
(1) The withdrawn moneys are used for eligible expenses related to a qualified beneficiary's purchase of his or her primary residence outside of the state; or
(2) The withdrawn moneys are from a first-time home buyer savings account for which the qualified beneficiary died, and the account holder does not designate a new qualified beneficiary during the same tax year.
4. If the account holder dies or, if the first-time home buyer savings account is jointly owned, the account holders die and the account does not have a surviving transfer-on-death beneficiary, then all of the moneys in the account that were used for a tax deduction under section 143.1150 shall be subject to recapture in the tax year of the death or deaths, but no penalty shall be due to the department.
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(L. 2018 H.B. 1796)
*Word "section" appears in original rolls.