How much of my IRA will be taxed if I'm using it toward the down payment of my first home?

by Joseph G. Tropiano II, CPA | Jan 11, 2017
askacpaiconI am about to become a first-time home buyer with my fiancé in Pennsylvania. I am using an IRA I have with Wells Fargo as part of my down payment. The account totals $11,411. How much should I set aside for taxes and fees? I am 28 years old.

The maximum you can take out of an IRA as a first-time homebuyer is $10,000 to avoid the 10 percent early distribution penalty.

The $10,000 will still be subject to regular income tax. The tax amount will depend on your marginal tax rate.

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Answered by: Joseph G. Tropiano II, CPA, is with Siana, Carr, O’Connor & Lynam LLP in Paoli, Pa.
Disclaimer
The responses are based on the limited information provided by the questioner and apply the laws and regulations at the time of posting. Other options could arise as rules and regulations may change over time, including but not limited to the passage of the Tax Cuts and Jobs Act of 2017. They are intended to provide general information, not specific accounting or tax advice; they are not intended or written to be used and cannot be used for the purpose of avoiding or evading taxes or penalties under the IRS code or regulations. Views expressed do not imply an opinion of the PICPA, its officers, directors, employees, or members.
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