Montana Code 15-63-202. Tax exemption — conditions
15-63-202. Tax exemption — conditions. (1) Except as provided in this section, the amount of principal provided for in subsection (2) contributed prior to January 1, 2024, by an account holder to an account and all interest or other income on the principal that was contributed prior to January 1, 2024, may be excluded from Montana taxable income of the account holder and is exempt from taxation, in accordance with 15-30-2120, as long as the principal and interest or other income is contained within the account or withdrawn only for eligible costs for the purchase of a single-family residence by a first-time home buyer. Any part of the principal or income, or both, withdrawn from an account may not be excluded under subsection (2) and this subsection if the amount is withdrawn from the account and used for a purpose other than for eligible costs for the purchase of a single-family residence.
Terms Used In Montana Code 15-63-202
- account: means an account established with an account administrator in this state pursuant to 15-63-201. See Montana Code 15-63-102
- Account administrator: means :
(a)a state or federally chartered bank, savings and loan association, credit union, or trust company;
(b)a certified public accountant licensed to practice in this state pursuant to Title 37, chapter 50; or
(c)the account holder. See Montana Code 15-63-102
- Account holder: means an individual who is a resident of this state and who establishes, individually or jointly, a first-time home buyer savings account. See Montana Code 15-63-102
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Bankruptcy: Refers to statutes and judicial proceedings involving persons or businesses that cannot pay their debts and seek the assistance of the court in getting a fresh start. Under the protection of the bankruptcy court, debtors may discharge their debts, perhaps by paying a portion of each debt. Bankruptcy judges preside over these proceedings.
- Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
- Eligible costs: means the downpayment and allowable closing costs for the purchase of a single-family residence in Montana by a first-time home buyer. See Montana Code 15-63-102
- First-time home buyer: means an individual who has never owned or purchased under contract for deed, either individually or jointly, a single-family residence in Montana or out-of-state. See Montana Code 15-63-102
- Single-family residence: means an owner-occupied residence in Montana, including a manufactured home, trailer, or mobile home, that is an improvement to real property or a condominium unit that is owned by or that has been purchased under contract for deed by a person, individually or jointly. See Montana Code 15-63-102
- United States: includes the District of Columbia and the territories. See Montana Code 1-1-201
(2)For contributions to principal that were made prior to January 1, 2024, there is no limitation on the amount of principal and interest or other income on the principal that may be retained tax-free within an account.
(3)The account holder who establishes the account, individually or jointly, is the owner of the account. An account holder may withdraw money in an account and deposit the money in another account with a different account administrator or with the same account administrator without incurring tax liability.
(4)The account holder shall use the money in the account for the eligible costs related to the purchase of a single-family residence within 10 years following the year in which the account was established. Any principal and income in the account not expended on eligible costs at the time of purchase of a single-family residence or any principal or income remaining in the account on December 31 of the last year of the 10-year period must be taxed as ordinary income.
(5)The amount of a disbursement of any assets of a first-time home buyer savings account pursuant to a filing for protection under the United States Bankruptcy Code, 11 U.S.C. § 101 through 1330, by an account holder does not subject the account holder to tax liability.
(6)Within 30 days of being furnished proof of the death of the account holder, the account administrator shall distribute the principal and accumulated interest or other income in the account to the estate of the account holder or to a designated pay-on-death beneficiary as provided in 72-6-223.