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Author: shebaandtoby Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 120820  
Subject: IRA early Withdrawal Date: 7/31/2001 12:39 AM
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Thanks for the info. I'd like to know if I have to wait 5 years to withdrawal (w/o penalty) for 1st time home purchase like the Roth IRA.
Also would a roof replacement or window replacement for the whole house be considered maint/repairs (this is around $10K each)?
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Author: acm4tax Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 52969 of 120820
Subject: Re: IRA early Withdrawal Date: 7/31/2001 9:15 PM
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Thanks for the info. I'd like to know if I have to wait 5 years to withdrawal (w/o penalty) for 1st time home purchase like the Roth IRA.


You may withdraw any of your original ROTH contributions (NOT conversion contributions) any time out of your ROTH IRA without penalty or tax.

A first time home buyer is one who hasn't owned a home for at least 24 months. Then you may withdraw up to $10,000 out your IRA without penalty. But if it's from a traditional IRA, you'll have to pay the taxes on the withdrawal. If it's from a ROTH, only the amount previously taxed will be exempt from the tax. Watch the dates of the withdrawal. It must fall within so many days of a purchase(Closing) of your new residence.

Also would a roof replacement or window replacement for the whole house be considered maint/repairs (this is around $10K each)?
These types of expenditures are capital improvements.

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Author: shebaandtoby Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 52977 of 120820
Subject: Re: IRA early Withdrawal Date: 7/31/2001 10:25 PM
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Please clarify if I need to wait 5 years in order to use my Traditional IRA money for 1st time home purchase like the Roth. I understand this money is for closing costs and capital improvements wouldn't be under this umbrella then. Thank you.

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Author: acm4tax Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 52982 of 120820
Subject: Re: IRA early Withdrawal Date: 7/31/2001 11:26 PM
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Please clarify if I need to wait 5 years in order to use my Traditional IRA money for 1st time home purchase like the Roth.

There is no 5 year period to use your traditional IRA to make a first time home purchase. No penalty - just the tax on the withdrawal up to $10,000 in your lifetime.

By the way, if you have some other source that become available to make
a repayment of any of the withdrawal from your traditional IRA within 60 days, you could reduce your tax bill. Only those funds not repaid within 60 are subject to tax.

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Author: cyncalvin Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53186 of 120820
Subject: Re: IRA early Withdrawal Date: 8/8/2001 8:48 PM
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I'm considering using 10k from an IRA for first home purchase. I haven't found much talking about how this negatively effects you.
I spoke to the company holding my IRA, Schwabb. They said they do
nothing but send me the money. They recommended I speak with a tax
specialist.

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?


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?

Thanks.

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Author: irasmilo Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53188 of 120820
Subject: Re: IRA early Withdrawal Date: 8/8/2001 9:46 PM
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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 www.irs.gov.

Ira




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Author: Bob78164 Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53192 of 120820
Subject: Re: IRA early Withdrawal Date: 8/9/2001 1:22 AM
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irasmilo writes (in part):

You don't have to repay anything. In fact, you can't repay anything.

I reply:

I'll pick a nit. You can repay any or all of a withdrawal from an IRA back to the IRA (or a different one, for that matter) if you do so within 60 days of the original withdrawal. It's simply treated as a rollover (as I'm sure Ira knew but overlooked in this context). --Bob

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Author: irasmilo Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53195 of 120820
Subject: Re: IRA early Withdrawal Date: 8/9/2001 7:31 AM
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Bob,

You're correct. I did assume that someone who is looking at the first-time homebuyer's penalty exclusion isn't looking to solve a short-term cash flow problem.

You can pick the nits off me whenever you want <g>.

Ira

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Author: cyncalvin Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53199 of 120820
Subject: Re: IRA early Withdrawal Date: 8/9/2001 12:04 PM
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Wow. I did not know it was not repayable (a loan).

How would I determine California's position on penelty?
I done some searching but I can't locate an answer.

Appreciate your time, Cynthia

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Author: irasmilo Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53207 of 120820
Subject: Re: IRA early Withdrawal Date: 8/9/2001 4:01 PM
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How would I determine California's position on penelty?

Bad news and good news. The bad news is that CA imposes a 2.5% penalty on premature distributions from IRAs. The good news is that a distribution used for a first time home purchase is exempt from the penalty (up to $10,000). For more details see

http://www.ftb.ca.gov/forms/00_forms/00_3805P.pdf

Ira

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Author: irasmilo Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53208 of 120820
Subject: Re: IRA early Withdrawal Date: 8/9/2001 4:02 PM
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In case it wasn't clear, a distribution of up to $10,000 used for a first-time home purchase is exempt from the penalty, not that up to $10,000 in penalties would be exempt.

Ira

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