I put $2000 into a Roth IRA both this year and the last, buying SPYDERS. My $4000 investment is now worth ~$3500. I'm thinking about buying a condo, and pulling my money our of the IRA for part of the down payment. Had the account increased, I know I could have pulled at least the original contributions out without a penalty or paying taxes on it, and if I waited another three years, I could pull up to $10,000 of accumulated gains out as well to pay for a house with no penalties. But my account has lost money. If I sell everything now, and close the account, do I get a $500 capital loss?

I put $2000 into a Roth IRA both this year and the last, buying SPYDERS. My $4000 investment is now worth ~$3500. I'm thinking about buying a condo, and pulling my money our of the IRA for part of the down payment. Had the account increased, I know I could have pulled at least the original contributions out without a penalty or paying taxes on it, and if I waited another three years, I could pull up to $10,000 of accumulated gains out as well to pay for a house with no penalties. But my account has lost money. If I sell everything now, and close the account, do I get a $500 capital loss?

No. I am of the opinion that you have a miscellaneous itemized deduction if you liquidate your Roth IRA for less than the total contributions to it. You won't find that written anywhere, but I infer that from the Publication 590 discussion of losses in traditional IRAs and the fact that the law says Roth IRAs are treated the same as traditional except where the law specifies otherwise.

Remember that if you liquidate your Roth, you can't "make up" the contributions for those past years.

Phil Marti
VITA Volunteer

Thanks. I'm aware I can't make up contributions, but the main reason I was utilizing the Roth IRA was to save up for a home, so I'm not overly worried about that. I just didn't think I'd be buying anything this early, but I found a place I really liked, and want to jump on it now.