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 Lane Your Own Question
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 12690
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
1929974
Type Your Tax Question Here...
Lane is online now
A new question is answered every 9 seconds

If I took money out of a IRA for a down payment on a house

Customer Question

If I took money out of a IRA for a down payment on a house and lost the down payment can I write this off.
Submitted: 4 years ago.
Category: Tax
Expert:  Lane replied 4 years ago.

Customer:

How did you lose this downpayment?

Customer:

IN a typical home closing, the borrower can write off the portion of closing costs even NOT paid out-of-pocket. For example, he can deduct all seller-paid closing costs that covered his deductible items, including pre-paid mortgage interest, insurance and taxes. A seller may also pay points, which are deductible. ... A downpayment, however, is only tax deductible if the funds came from a deductible source, like another home loan refinance, or a second mortgage or home equity line of credit on another property. This down payment ... that comes from these sources is deducted for the same year the mortgage interest is paid. ... But help me understand what you mean by lost Are you talking about earnest money?


id="section-4" class="section">

 



JACUSTOMER-rw1r6fw2- :

Interest rates went up and I could not afford the home but the builder clause stated after 5 days they could keep down payment.

Customer:

I'm so sorry - but If this was to purchase a personal residence any forfeited down payments, earnest money or deposits are nondeductible. For additional information please see IRS Publication 530, Tax Information for First-Time Homeowners. You can view or download publicatons at www.irs.gov or order a free copy by calling(NNN) NNN-NNNN

JACUSTOMER-rw1r6fw2- :

Yes I believe it is considered earnest money. As I stated before I withdrew it from my IRA to put down on the home.

Customer:

The IRA piece is really a separate issue, but again the downpayment, lost, itself is not deductible

JACUSTOMER-rw1r6fw2- :

thank you.

Customer:

Was this a first time home purchase?

Customer:

Said better, did you or your wife, if married, not own a principal residence at any time during the previous two years?

Customer:

I still don't see you coming back into the chat .... SO I'll add this and then move us to the "Q&A" mode. ... Maybe that will help

Customer:

You can use up to $10,000 in IRA funds toward the purchase of your first home. If you're married, and you and your spouse are both first-time buyers, you each can pull from retirement accounts, giving you $20,000 in residential cash, without the 10% penalty.

Customer:

Let me know if you questions...

Customer:

Lane

Expert:  Lane replied 4 years ago.

Hi Randall

 

Our chat has ended, but you can still continue to ask me questions here until you are satisfied with your answer. Come back to this page to view our conversation and any other new information.

What happens now?

If you haven’t already done so, please rate your answer above. Or, you can reply to me using the box below.

 

Let me know...

 

Lane