Would the penalty be waived for first-time home buyers if they withdraw funds from an IRA for a down payment on a home?

by Paul K. Rudoy, CPA, PFS | Jul 11, 2018

As first-time home buyers (my husband sold his house in 2014, and I haven't owned a home in over seven years) would the 10 percent penalty be waived if I were to withdraw funds from my traditional IRA for a down payment on a house?

The first-time home buyer exception applies if the person buying the residence, and your spouse if married, must have not had an ownership interest in a principal residence during the two-year period ending on the date that the new home is acquired.
Further, the lifetime limit for exception to the 10 percent penalty for a first-time home buyer is $10,000.

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Answered by: Paul K. Rudoy, CPA, PFS, is managing partner of H2R CPA in Pittsburgh, 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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