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Ask Shop Rate: Pam, VA

Posted by  on Apr 16, 2009
 
Can I use IRA retirement funds for a downpayment on a house? Yes, if you liquidate the funds from your IRA you most certainly can use them for a downpayment for a home. Since the 1997 Taxpayer Relief Act went into effect, people have been able to withdraw funds to pay up to $10,000 in first-time homebuyer expenses without incurring any penalties. Such withdrawals are, most likely subject to being taxed.

Other restrictions include a 120 day time limit for buying the house from the day after the withdrawal is made, and the house must be purchased for use as the buyer’s principal residence. Just keep in mind that the $10,000 limit is a lifetime limit - if you do this now, you won’t do it again in the future.


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