Can my spouse and I use our IRAs to purchase our first home?

By Denise Appleby AAA
A:

IRA owners can make penalty-free distributions to buy a first home for themselves, their spouses, children, grandchildren or other family members. This distribution cannot exceed $10,000 for each spouse's lifetime, and exempts IRA owners from the early-distribution penalty (which applies to distributions occuring before an IRA owner reaches age 59.5). You do not have to buy a pre-existing home in order to be eligible for the waiver. The waiver also applies to building or rebuilding a home.

The distribution received must be used to pay qualified acquisition costs before the end of the 120th day after the IRA owner receives the distributed assets.

According to the IRS, you are a first-time home buyer if you have not owned an interest in a principal residence during the first two years prior to the purchase of a new home. Principal residences include mobile homes and house trailers, houseboats and stock held by a tenant-stockholder in a cooperative housing corporation.

For more insight, see Tax Treatment Of Roth IRA Distributions.

This question was answered by Denise Appleby
(Contact Denise)

RELATED FAQS

  1. How do real estate agents get listings?

    Learn about how real estate agents get listings in top real estate markets, as well as in smaller areas, through utilizing ...
  2. What is a 401(k) rollover?

    Find out what a 401(k) rollover is, when you might want to roll over a 401(k) and whether a direct or indirect rollover is ...
  3. Are qualified pension plans taxable?

    The taxable portion of your pension or annuity payments is usually subject to federal income tax withholding, according to ...
  4. How do you withdraw money from your 401(k)?

    Deciding to take a withdraw from your 401k is not a decision that should be made lightly. However, for those who needs funds, ...
RELATED TERMS
  1. Elder Care

    Elder care, sometimes called elderly care, refers to services ...
  2. Commercial Real Estate Loan

    definition of a commercial real estate loan
  3. Gold IRA

    Definition of Gold IRA
  4. Eligible Transfer

    An IRS-allowed movement of assets into or out of an individual ...
  5. Realtor Property Resource (RPR)

    A National Association of Realtors member benefit providing realtors ...
  6. Housing Choice Voucher Program

    The Housing Choice Voucher Program helps families with very low ...
comments powered by Disqus
Related Articles
  1. 10 Steps For First-Time Home Buyers
    Home & Auto

    10 Steps For First-Time Home Buyers

  2. Top Financial Frights: Emergencies & ...
    Investing Basics

    Top Financial Frights: Emergencies & ...

  3. Steps To Retiring With A Reverse Mortgage
    Retirement

    Steps To Retiring With A Reverse Mortgage

  4. 10 Questions You Forget to Ask When ...
    Home & Auto

    10 Questions You Forget to Ask When ...

  5. When Your Job Offers An Awful Retirement ...
    Retirement

    When Your Job Offers An Awful Retirement ...

Trading Center