Homebuyer irsfirst 

 April 6, 2019

By  Scott Teesdale

Withdrawal of IRA Assets
To Buy a First Home

First home. To qualify for penalty-free withdrawal treatment as a first-time homebuyer distribution, a distribution must meet the following requirements.

It must be used to pay qualified acquisition costs (defined later) before the close of the 120th day after the day you received it.
It must be used to pay qualified acquisition costs for the main home of a first-time homebuyer (defined later) who is any of the following.

  • 1.Yourself.
  • 2.Your spouse.
  • 3.Your or your spouse’s child.
  • 4.Your or your spouse’s grandchild.
  • 5.Your or your spouse’s parent or other ancestor.
  • 6.When added to all your prior qualified first-time home buyer distributions, if any, the total distributions cannot be more than $10,000.

If both husband and wife are first-time home buyers (defined later), they each can withdraw up to $10,000 penalty-free for a first home.

Qualified acquisition costs. Qualified acquisition costs include the following items.

  • Costs of buying, building, or rebuilding a home.
  • Any usual or reasonable settlement, financing, or other closing costs.

First-time home buyer. A first-time home buyer is, generally, any individual (and his or her spouse, if married) who had no present ownership interest in a main home during the 2-year period ending on the date the individual acquires the main home to which these rules apply.

Date of acquisition. The date of acquisition is the date that:

  • 1.The first-time homebuyer enters into a binding contract to buy the main home to which these rules apply, or
  • 2.The building or rebuilding of the main home to which these rules apply begins.

Source: IRS Publication 590

Related Posts

Millennial’s Mortgage Guide for First Time Home Buyers

Is it better to pay my property taxes directly or include them in my mortgage payments?

Homebuyer contract

Homeseller contracts

Subscribe now to get the latest updates!