First Time Home Buyer
A couple who is getting married later this year is buying a house.
She currently owns a condo and will not be selling it.
He has never owned a home/condo before.
Both are under 59.5%
Nothing has been signed yet.
To qualify for the first time home buyer (no 10% penalty) for withdrawals from traditional IRA or earnings from his Roth, I think the house would have to be in his name only. Am I correct?
Permalink Submitted by Alan - IRA critic on Tue, 2021-04-20 19:53
It wouldn’t have to be in his name only, but it would have to be purchased before they are married. She could be on the title but could not qualify for a first home distribution from any of her IRAs. Once married, her prior ownership would disqualify both of them from using the first time homebuyer 10,000 benefit.
If he qualifies the 10,000 lifetime limit includes both early distribution waivers and qualified Roth distributions. Under the Roth ordering rules, there is no benefit of claiming 10,000 on line 20 of Form 8606 if the distribution is not large enough to tax Roth earnings. The 10,000 can be used to waive the 5 year holding period for Roth conversions if such conversions are tapped within 5 years.
But the main issue is that the purchase would have to close before they are married to utilize the first home benefit from his IRAs.