Use your IRA to buy a home. Good idea or Bad Idea?

Did you know that first time buyers have the ability to pull money out of an IRA to use towards the purchase of a principal residence? If you act quickly, you may be able to pull money out of your retirement account, buy a home, then pay yourself back with the $8000 tax credit. You should consult your CPA for tax consequences but why not take advantage of a great loophole for first time buyers!! Act fast, only 82 days left until the tax credit deadline. Contact me to discuss your individual questions.

From Investopedia (a FORBES Digital Company)

IRA owners can make penalty-free distributions to buy a first home for themselves, their spouses, children, grandchildren or other family members. This distribution cannot exceed $10,000 for each spouse's lifetime, and exempts IRA owners from the early-distribution penalty (which applies to distributions occuring before an IRA owner reaches age 59.5). You do not have to buy a pre-existing home in order to be eligible for the waiver. The waiver also applies to building or rebuilding a home.

The distribution received must be used to pay qualified acquisition costs before the end of the 120th day after the IRA owner receives the distributed assets.

According to the IRS, you are a first-time home buyer if you have not owned an interest in a principal residence during the first two years prior to the purchase of a new home. Principal residences include mobile homes and house trailers, houseboats and stock held by a tenant-stockholder in a cooperative housing corporation.