How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Lev Your Own Question
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29574
Experience:  Taxes, Immigration, Labor Relations
Type Your Tax Question Here...
Lev is online now
A new question is answered every 9 seconds

I have an IRA account. Can I borrow from this account to make

Resolved Question:

I have an IRA account. Can I borrow from this account to make down payment on a second home? This will not be a rental. Is there a standard formula to do this and how will this effect my tax return?
Submitted: 8 years ago.
Category: Tax
Expert:  Lev replied 8 years ago.

Please see for reference the IRS publication 590 - - page 45 - Prohibited Transactions

Generally, a prohibited transaction is any improper use of your traditional IRA account or annuity by you, your beneficiary, or any disqualified person.
Disqualified persons include your fiduciary and members of your family (spouse, ancestor, lineal descendant, and any spouse of a lineal descendant).
The following are examples of prohibited transactions with a traditional IRA.
-- Borrowing money from it.
-- Selling property to it.
-- Receiving unreasonable compensation for managing it.
-- Using it as security for a loan.
-- Buying property for personal use (present or future) with IRA funds


So far - you can't borrow the money from the IRA account. If you take the money to make a down payment - that would be a distribution and full amount of distribution will be generally your taxable income. Additional 10% early distribution penalties will apply if you are less than 59 1/2.


Lev and other Tax Specialists are ready to help you