Can I take money out of my IRA to buy a new home?
January 19, 2005
Date: Wed, 15 Dec 2004
I will be getting married in 2005 and my fiancée and I would like to purchase a home. We are using all of our savings to pay for our wedding. I have about $32,000 in a SEP-IRA account and was considering withdrawing $10,000 for a down payment and my fiancée was thinking of doing the same. Will there be any penalties for doing this? My fiancée sold his previous residence more than two years ago.
I would greatly appreciate any answer. Thank you very much.
Date: 20 Dec 2004
There is an exception to the 10% penalty for early withdrawals from IRAs that specifically applies to the situation you have described. The penalty won't apply, but the distributions will be subject to income taxes. The proceeds must all be applied to the purchase of the house, so you might have a hardship coming with the money to pay your income taxes.
When your finances are as tight as they are, it seems to me you might be better off waiting until things improve.
We have more answers to frequently asked real estate tax questions! We also offer up-to-date information about new tax real estate tax developments in Michael Gray, CPA's Real Estate Tax Letter.
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