Do you want content like this delivered to your inbox?
Share

Finding a down-payment..... 


Share

Finding a Down-Payment, are we allowed to tap our IRA?

Finding a down-payment: Can I tap my IRA to buy house?

 

NEW YORK – June 25, 2018 – Question: I've heard that I can withdraw money from my IRA to help pay for my first house. Is this true?

Answer: To be perfectly clear, you can withdraw money from your IRA whenever you want. But if you do it without an IRS-allowed exemption, you'll end up paying a 10 percent early withdrawal penalty.

Fortunately for first-time home buyers, there is such an exemption. First-time home buyers can take out as much as $10,000 from their traditional IRA penalty-free, although it will still count as taxable income. And if your spouse also has a traditional IRA, they can take out $10,000 as well.

Furthermore, the home buyer doesn't necessarily have to be you. You can use the money to help your child, grandchild or parent buy a home as well.

If you have a Roth IRA, you may be able to take out even more. You can always withdraw Roth IRA contributions (but not your earnings) tax- and penalty-free. Plus, you can withdraw up to $10,000 of your earnings under the first-time home buyer exemption, and if your account has been open for more than five years, the withdrawal will be tax-free.

Also, the IRS has a liberal definition of what a "first-time" home buyer is. Basically, you must not have owned a principal residence within the last two years.

So even if you're not really a first-timer, you may still qualify.

Copyright 2018, USATODAY.com, USA TODAY, Matthew Frankel, The Motley Fool


Information provided by Florida Realtors.  Click here to see the original article.

How may we help?

Do you have questions?  Would you like more information?

Reach out to Mike
We use cookies to enhance your browsing experience and deliver our services. By continuing to visit this site, you agree to our use of cookies. More info