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Are the *only* downsides to using the money the following:
- adds 10K to your taxable income
- you have to repay the amount plus how much for interest (who sets the payment & interest amount)?
- the money is not in your IRA doing the compond thing?

Yes, it adds 10K to your adjusted gross income. This can affect other items on your tax return such as itemized deductions and credits.

You don't have to repay anything. In fact, you can't repay anything. It is not a loan. It is a withdrawal. You may be confusing this with a loan against a 401(k) plan.

Yes, the money is not doing the compond (sic) thing.

Also, check with your state. Some states also assess an early distribution penalty and don't recognize the first time purchase of a home as a exception.

Also, Is there a good source for first time home buyers regarding tax effects. Will I need to have a CPA do my taxes after purchasing a home or is it not too complicated for a non-CPA like me?

Get hold of a copy of IRS Publication 530, Tax Information for First Time Homeowners. You can find it in pdf format at


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