Do I qualify for the first-time home buyer distribution if my wife owns our current home?

by Ibolya Balog, CPA | May 14, 2018

My wife and I are preparing to buy a home, so we are getting funds together for the down payment. I have a Roth IRA that I would like to take a first-time home buyer distribution from since I have personally never bought a home. However, my wife bought a house before we got married, which we currently live in. My Roth IRA is only in my name, and the house has never been in my name. Do I still qualify for the first-time home buyer distribution?

Only $10,000 may be withdrawn penalty-free from any IRA toward the purchase of a first-time home. To be considered a first-time home buyer, the person buying the residence must not have had an ownership interest in a principal residence during the two-year period ending on the date of the purchase of the new home.
In this instance, the determining factor is not whether you ever bought a home, but whether you had an ownership interest in the current home. If the home you currently live in is only owned by your wife, and the new one will be owned only by you, then the first-time homeowner distribution from an IRA may apply. If during the marriage you also became an “owner” by way of being added to the deed, then the first-time home buyer exemption does not apply.

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Answered by: Ibolya Balog, CPA, is an associate professor at Cedar Crest College in Allentown, Pa.

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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