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 can I use my Roth IRA savings to buy my first home?

    Use your Roth IRA to help fund the purchase of your first home, and find out about ways to access these funds even if you ...
  2. How should you choose the amortization period for your mortgage?

    Read about key considerations that homeowners should take into account before choosing the amortization period for their ...
  3. What is the key to finding your ideal mortgage?

    Learn what steps you need to take in order to locate the perfect mortgage for your budget, lifestyle and long-term financial ...
  4. Where are home values falling the fastest in the US, and why?

    Learn about the metropolitan areas in the United States experiencing the largest drops in median single family homes values ...
RELATED TERMS
  1. Senior Move Manager

    Senior move managers (SMMs) help seniors downsize and relocate ...
  2. Elder Care

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

    definition of a commercial real estate loan
  4. Gold IRA

    Definition of Gold IRA
  5. Eligible Transfer

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

    A National Association of Realtors member benefit providing realtors ...

You May Also Like

Related Articles
  1. By focusing on habits, you will adopt simple, sustainable behaviors that will put you on the path to achieving bigger and better goals in 2015 and beyond.
    Personal Finance

    What Are Your New Year’s Financial Habits? ...

  2. It can be great to live in the moment, but the actions and decisions you make now can greatly impact your sense of financial security down the road.
    Personal Finance

    How Do Americans Keep Minimizing Their ...

  3. You need to be patient, diligent and perseverant to be successful at investing, but more importantly, you need to start early.
    Investing Basics

    Why You Should Start Investing Early? ...

  4. Many of us fantasize about winning a big lottery jackpot. Let’s say that actually happened? What would you do with the money? How would you manage it?
    Professionals

    Tips For Managing A Cash Windfall

  5. Retirement

    Planning Ahead for 2015's Tax Law Changes

Trading Center