buying home with ira money
i heard its $10,000 that can be withdrawn to purchase a home but who should the check be made out to to prove that the funds were used to purchase a home and avoid a tax penalty. Can i have the funds withdrawn from my IRA $10,000 and be made out to the attorney representing the seller of the home? Or does it need to be made out to someone else?
Permalink Submitted by Alan Spross on Mon, 2012-04-30 18:06
There is no requirement for a certain payee on the check. You could deposit the distribution in your checking account and then the amount up to 10,000 can be considered part of your settlement check to close the purchase. If the IRS requests evidence, all you need to show is the closing statement indicating the amount of your approved costs at least equal to the amount of your distribution.
Note that there is a 120 day time limit for for paying the costs and other requirements to meet the definition of “first home purchase”. If the deal falls through, you also have 120 days to roll the distribution back to your IRA.
If this is a traditional IRA, the distribution will still be taxed, but the penalty is waived when you file Form 5329 showing exception code 09. If you are using a Roth distribution, things are much more complex, so please advise if you plan to use a Roth IRA distribution.
Permalink Submitted by james gallagher on Mon, 2012-04-30 18:40
no it is a regular IRA. Thank you for answering my question.