Roth IRA use for first-time home buyer: If I buy the home in April, how long can I wait to withdraw the money?

Question

I want to let the money accrue interest/earnings tax free for as long as possible, but didn't want to lose the ability to withdraw the money penalty-free. I've had the account for more than 5 years, so that requirement is met.

Additionally, can it be used for "renovating" my first home, or does it HAVE to go towards a down payment or closing costs etc.?

Thanks in advance, good sources will get the "Best Answer"

Answer 1

The money must be used to pay the qualifying acquisition costs 120 days BEFORE they occur. There is no provision to withdraw the money after closing. Also, the money must be used to buy, build, or rebuild, not refurbish the home. The principal can always be pulled out tax-free, penalty-free at any time for any reason. Only the interest is subject to taxation and penalties BOTH of which are waived if use for the first time home purchase assuming the account has been open for at least 5 years (and you didn't roll over money from an IRA into the account within 5 years) and you didn't own a home for the last 2 years.

Good luck with your new home!

Answer 2

I don't think you understand all of the rules behind the Roth.

First, you will have to talk to your brokerage to see how long it will take them to process your distribution. I'd give yourself a month.

Second, you never lose the ability to withdraw your contributions tax and penalty free so that's not a problem. You can do this at any time, the 5 years doesn't matter.

Third, earnings are a different matter. To take out earnings without penalties the money has to go towards the purchase of your first house, not renovations. If you are using the money for a different purpose you'll have to pay the 10% penalty on the earnings.

Good luck to you. Be very, very sure that risking your retirement is a good idea before you actually go through with this.

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Answer 3

Thats a tricky question because of the fact actual property markets selection from area to area. i will purely permit you be attentive to that i will purely purchase a property in spite of if it is an absolute large deal. I do positioned money into actual property and am staring at issues very heavily. With the quantity of foreclosure and financial employer owned residences on the marketplace in my area, i'm seeing the makings of a severe dip in homestead fees quickly. additionally with the type of lenders going out of business enterprise, financing could be puzzling regardless of those with solid credit. this implies much less qualified shoppers and a growing to be inventory of empty properties likely willcontinual fees down. additionally, many counties in my state are actually not any greater issueing new construction helps on residential advancements. touch a actual property investor on your area. not necesarily a actual property agent considering that maximum are wanting to sell a house and could be prepared to declare something to get you to purchase. a solid actual property investor could have a solid concept of ways your marketplace is doing. you won't be able to consistently goto a internet site and get the vast photograph. purely diligent examine of your area will try this.

Answer 4

It has to be used for the purchase.