Early Withdrawal

Question: I am buying my first house, and want to withdraw some from my Roth IRA without the 10% penalty.?

I have read the IRS definition of “first time home buyer”, and have a question. I do not own a home or pay a mortgage currently. I rent a house from my dad currently, and am also on the title for that house (used to be my grandfather’s house). Does this prevent me from being a “first time home buyer” per the IRS definition of not having a “present interest in a main home for 2 years”?

Answer: You are able to withdraw your own contributions to a Roth IRA at any point, penalty free. It is only the portion of your Roth that it earnings that are subject to penalties.

That being said, DON’T DO IT. You can’t replace the money later and with the compounding the money will do towards your retirement, it will be much more valuable later. The current real estate market hasn’t bottomed out yet and you can use some time to save up a real downpayment.

Good luck.

ps – I think you should contact a tax expert on the second question about being a first time home buyer.

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