Can I take money from my IRA to pay home building costs?
January 29, 2007
Date: Sun, 05 Nov 2006
I purchased the land for my first home in the beginning of 2005 and have been building it. I relocated for family matters and have been unemployed for years while helping my parents and building the home.
I have been drawing down my savings. Can I still qualify for the exception from early distribution penalty for withdrawing funds from an IRA?
I thank you for your time. Any advice you can offer will be greatly appreciated.
Date: 22 Nov 2006
It appears you can, providing you are paying for costs you are currently incurring for building the home. The lifetime maximum that you can withdraw for this purpose is $10,000. The payment must be used within 120 days after receiving it to pay qualifying acquisition costs. Qualified acquisition costs include the costs of constructing a new residence. You must use the home as your principal residence after you finish building it. (Internal Revenue Code Section 72(t)(8).)
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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