Can I use my IRA to buy my first house?

If you have not owned a home over the past two years, you can use up to $10,000 from your IRA account toward the purchase of a primary residence. The money can be used to buy or build a home for you, your parents, your children or your grandchildren. Combine this benefit with the first-time buyer’s tax credit, a healthy supply of inventory to choose from and low interest rates….it’s a great time to be a buyer in today’s market!

There are some potential tax consequences so you should consult with your tax accountant. If you use money from a traditional IRA, you must pay tax on the amount withdrawn but no penalty is due. If the money comes from a ROTH IRA that is over five years old, no tax is due. If the ROTH IRA is less than five years old, you will owe tax only on the earnings portion of the distribution.

(Source: Brighton Securities)

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