Saving up for your first home is an intimidating undertaking, even for the most diligent of savers. With the rate at which Portland-area real estate is growing, it may be tempting to withdraw money from a retirement account to lessen the financial burden, but there a few things you should know before considering taking money from your IRA. These tips may help you decide if withdrawing from your IRA is the right choice for you.
Know What You Can Withdraw
The maximum penalty-free withdrawal from an IRA under the homebuyer exemption is $10,000 and that number is absolute, but with a Roth IRA, you may have a little more wiggle room. Figure out what, if any options you have to avoid penalties and get the maximum withdrawal.
Figure Out What Taxes You May Have To Pay
The homebuyer exemption may be penalty-free, but don’t assume that it will be tax-free. Traditional and Roth IRAs will have different stipulations regarding taxes, so learn what to expect before deciding to withdraw.
Know Precisely What You Can Use The Money For and When
Typically, funds withdrawn from an IRA under the homebuyer exemption must be used for “qualified acquisition costs” ie; the cost of buying, building or rebuilding a home plus. This may also include settlements, financing or other closing costs. Additionally, those funds must be used within 120 days of receiving the distribution.
Stonebridge Mortgage Group can help you with your Reverse Mortgage, Real Estate Loan, and many other mortgage solutions. We serve the greater Portland area and are located in Gresham, Oregon. Call us today at 503.661.5580
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