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

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Only $10,000 may be withdrawn penalty-free from any IRA toward the purchase of a first-time home.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.

For more resources, check out PICPA’s Money & Life Tips, Ask a CPA, or CPA Locator.

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

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