| |
You are here: Experts > Business > Corporate Law > Tax Law (Questions About Taxes) > First time home purchase...
Expert: Helen P. O`Planick, EA
Date: 10/3/2008
Subject: First time home purchase...
Question
I am single and looking to purchase my first home. I am currently considering taking either a distribution from my Roth IRA or a residential loan from my 401k to help pay for the down payment. I understand that I should be able to do this without tax, fee and penalty as a qualified first-time home purchase.
I am also considering to make this purchase in partnership with someone else as joint tenancy. However while this is my first-time home purchase, this will not be their first-time home purchase.
My question, with it being a first-time home purchase only for myself, can I still take the loan or distribution without tax, fee and penalty to help with my half of the down payment?
I really appreciate your advice and guidance.
Answer
First, note that if you take a loan from your 401K and don't pay it back, you will pay taxes AND penalty. So if you are planning on leaving the job anytime before total repayment, it is not a good thing to do. 401K are not excludable for first time homebuyers.
If you take from your IRA, it is excludable, but you will pay taxes on the appreciation in your ROTH. The only thing excluded is the penalty.
And as long as you were a first time homebuyer, you are okay with it, even tho you co-own the home.
Helen, EA in PA
Add to this Answer
Ask a Question
|
|
