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Hello, I have had a simple ira account for the last 4 years.

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Hello, I have had a simple...
Hello,
I have had a simple ira account for the last 4 years. I now am purchasing my first home. However, I will be renting it out for 2 years before I move my family to live there myself. Will I still be able to escape the 10% early withdrawal penalty for closing my ira if I am renting it out for 2 years.
Submitted: 6 years ago.Category: Tax
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12/2/2011
Tax Professional: Robin D., Senior Tax Advisor 4 replied 6 years ago
Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 16,276
Experience: 15years with H & R Block. Divisional leader, Instructor
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Hello and thank you for using Just Answer.

Unfortunately as the property will not be your main home it will not qualify you to use the exception to exclude the 10% penalty from the early withdrawal. To use the exception the house would need to be your first time home and that means your main home. Also as you are using the property for rental it is an investment property and you will be required to file Schedule E to report your rental income and the expenses for the property.

I wish I could advise differently but the exceptions are rigid.

Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 16,276
Experience: 15years with H & R Block. Divisional leader, Instructor
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Customer reply replied 6 years ago
I also only have a $15,000.00 annual salary and don't pay income tax. I am assuming this won't make any difference with the early withdrawal penalty? Thanks, Larry
Tax Professional: Robin D., Senior Tax Advisor 4 replied 6 years ago
No the penalty is only calculated on your actual distribution not your income level.
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