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Marvin,EA
Marvin,EA, Enrolled Agent
Category: Tax
Satisfied Customers: 1672
Experience:  Enrolled to Represent Taxpayers Before The IRS
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I am single and looking to purchase my first home. I am currently

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I am single and looking to purchase my first home. I am currently considering taking either a distribution from my Roth IRA or a residential loan from my 401k to help pay for the down payment. I understand that I should be able to do this without tax, fee, and penalty as a qualified first-time home purchase.

I am also considering to make this purchase in partnership with someone else as joint tenancy. However while this is my first-time home purchase, this will not be their first-time home purchase.

My question is with it being a first-time home purchase only for myself, can I still take the loan or distribution without tax, fee, and penalty to help with my half of the down payment?

I appreciate your advice and guidance.
Hello and thank you for using Just Answer. You can take the withdraw from your 401K or IRA to purchase your principal residence but the withdraw might not be tax free. With your 401K, withdrawals to purchase of principal residence are still subject to income tax plus 10% early withdrawals penalty (www.irs.gov/faqs/faq-kw7.html) . With your Roth IRA withdrawals are considered to come first from regular contributions and then from earnings. No income tax or 10% penalty applies if a distributions is made after a five-year holding period for first-time homebuyer (www.irs.gov/taxtopics/tc428.html)
Customer: replied 8 years ago.
Thank you for your quick reply and answer. I really appreciate your advice.

So just to clarify before closing this question out, the fact I might be purchasing the home with someone else as joint tenancy should not affect my ability to take a distribution from my Roth IRA without penalty (or residential loan from my 401k) as a qualified first-time home purchase, even if it is not a first-time home purchase for the other party?

The other person(s) does not effect your ability to qualified as a first-time home buyer.

 

Example: Husband and wife buy a home. Husband second home but wife first home and she use her Roth IRA to pay for the home. Wife can withdrawal the amount from her IRA because she is a first-time homebuyer and had the Roth IRS for over 5 years.

Marvin,EA and other Tax Specialists are ready to help you
Customer: replied 8 years ago.
Great. Thank you very much for your help. I really appreciate your advice.
Thank you for using Just Answer.