The HUD website is a great resource for buying a home, whether it’s your first or your tenth! (https://hud.gov)
PENALTY-FREE IRA WITHDRAWALS FOR FIRST TIMERS
First-time homebuyers are eligible to withdraw $10,000 during their lifetime from their Individual Retirement Accounts (IRAs) without paying the 10% penalty for withdrawal before the age of 59½, assuming certain requirements are met. The biggest requirement is that the money must be used to buy or build a primary residence (not a vacation home). If you have a traditional IRA, you’ll have to pay income tax on the money withdrawn. Roth IRA accounts, however, aren’t subject to additional taxes, as they are funded with money that has already been taxed. The $10,000 lifetime amount that can be withdrawn penalty-free from an IRA is per each individual; this means a couple could withdraw $20,000 combined to pay for their first home. The person withdrawing also doesn’t have to be the future homeowner. A person under the age of 59½ can qualify for the tax exemption if they are helping a child, grandchild, parent, or another immediate family member purchase their first home. The money withdrawn from either a traditional or Roth IRA must be used within 120 days or it becomes subject to a penalty, so be sure to plan ahead. Depleting your retirement savings is also risky business, as it might, over time, be more cost effective to keep the money earning interest rather than applying it to your down payment. Speak to a financial advisor for help with your specific situation.
OTHER HOMEOWNER TAX BREAKS:
• The Mortgage Interest Deduction. This is one of the most beneficial tax breaks that homebuyers can take advantage 32
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