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What is the definition of a first time home buyer? I have owned homes in the past, but do not own one now or for the last eight years. Am I eligible for the tax free use of $10,000 from my IRA or 401K?

Well, this is from IRS Pub 590:

First-time homebuyer. Generally, you are a first-time homebuyer if you had no present interest in a main home during the 2-year period ending on the date of acquisition of the home which the distribution is being used to buy, build, or rebuild. If you are married, your spouse must also meet this no-ownership requirement.

So - as far as the IRS is concerned, if you haven't owned a home in the past two years, you're a first-timer. But note that the first-time-buyer provision simply waives the 10% early-distribution penalty. It doesn't necessarily make the use of the money tax-free. If you're talking about a traditional IRA to which you've contributed pre-tax dollars, you're still going to have to pay tax on at least part of the distribution.

Lorenzo
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