Kathy O'Brien Realty - Lake Champlain & Vermont
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tech <p> <a href="https://s3.amazonaws.com/files.usmre.com/5042/blog/misc/money-flying-image.png"><img alt="illustration IRA and cash" class="size-full wp-image-194" height="181" src="https://s3.amazonaws.com/files.usmre.com/5042/blog/misc/money-flying-image.png" width="250"/></a></p> <p> Your IRA for a Down Payment?</p> <h3> <em><strong>There is an alternative source for down payments if you are a first-time home buyer! Keep this in mind if you fall into this category...</strong></em></h3> Most taxpayers know that they will pay a 10% penalty if they withdraw funds from their IRA before they turn 59.5 years old. There is an exception for first-time home buyers that allows a penalty-free withdrawal of up to $10,000 per person if they havent owned a home in the previous two years. This would allow a married couple who each have an IRA to withdraw a lifetime maximum of $10,000 each, penalty-free for a home purchase. <strong>Yes, penalty free!</strong> In many cases, the money would be used for a down payment or closing costs. An additional added benefit - by increasing their down payment, some buyers will qualify for a loan without mortgage insurance.<!--more-->Of course you should always "read the fine print": If the taxpayer qualifies for the penalty-free withdrawal, there may still be taxes due. Contributions to traditional IRAs are made with before-tax dollars and therefor tax must be paid when the funds are withdrawn. The exception is for owners of a Roth IRA, made with after-tax dollars, where there is no tax due when the funds are withdrawn. Another notable fact - the taxpayer making the withdrawal can help a qualified relative which includes children, grandchildren, parents and grandparents. Whether you are the withdrawing taxpayer, or you&#39;re lucky enough to have a relative withdrawing on your behalf, this is additional good news! <em><strong>Homebuyers who are considering using IRA funds for a home purchase should get expert advice from their tax professional concerning their individual situation. The variables of every situation make for a unique set of circumstances.</strong></em> For more info, check out this article from US News &amp; World Report online: <a href="http://money.usnews.com/money/blogs/my-money/2013/10/28/using-your-ira-for-a-downpayment" target="_blank" title="Using Your IRA for a Down Payment">Using Your IRA for a Down Payment</a>. Or this article from nolo.com: <a href="http://www.nolo.com/legal-encyclopedia/using-ira-make-house-down-payment.html" target="_blank" title="Using an IRA to Make a House Down Payment">Using An IRA to Make a House Down Payment</a>.