First Time Home Buyer – a person who participates in the purhase of a home for the first time?
The IRS 10% early distribution penalty does not apply to an IRA distribution used to acquire (purchase, construct, or reconstruct, including any reasonable settlement, financing or other closing costs) a principal residence by a first-time home buyer. That is a technical definition of a First-Time Home Buyer I found.
Does that mean a spouse, who has never purchased a home prior to marriage, but participated in the refinancing of a spouses existing home after marriage, can the spouse who never actually purchased a home qualify as a First-Time Home Buyer?
It would be their first purchase but they have been on title for years due to refinancing.
“financing or other closing costs” is what is throwing me off.
Could someone explain how the definition of First-Time Home Buyer applies to this particular situation?
Thank you.
Permalink Submitted by mk foss on Tue, 2013-09-10 16:31
If someone is on title as a property owner, they cannot be a First-time Homebuyer until 2 years after the property is sold. The rule isnt whether you partcipated in the purchase of a home, it’s whether you own one – title would indicate that.
Permalink Submitted by Alan - IRA critic on Tue, 2013-09-10 17:12
If married, both spouses must meet the requirement of not having a present interest in a main home for the prior 2 years. Being on title is a present interest, so 2 years must pass after that spouse was no longer on title presuming it was a main home for the spouse on title. Now whether the prior statement applies to your situation or not is not clear. Would need a more thorough explanation of who, why and when this financing took place to know for sure, and if it was a main home. But since both spouses must individually qualify, the prior financing may not matter.
Permalink Submitted by Peggy Fisher on Tue, 2013-09-10 21:23
Thank you. That was great. Spouse who did not purchase main house but participated in the refinancing was on the title of the main house. Both spouses still living in main house and have a present interest.