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Do I have to pay tax on an early Roth IRA distribution if I used it to buy my first home?

SOLVEDby TurboTax167Updated December 13, 2023

If you take a Roth IRA distribution to buy your first home, up to $10,000 won’t be taxable as long as all the following conditions are met:

  • The property you’re purchasing qualifies as a first home. (Tip: Anyone who hasn’t owned a main home for two years may qualify as a first-time homebuyer.)
  • The home is being purchased for you, your spouse, or your child, grandchild, parent, or grandparent.
  • You purchase the home within 120 days of making the withdrawal.
  • You haven’t previously exceeded the $10,000 lifetime limit for first-home withdrawals.

Typically, if your Roth IRA is less than five years old, any earnings from your distribution will be taxable. But if your withdrawal meets the above conditions, you won’t have to pay the 10% early withdrawal penalty on these earnings (up to the $10,000 limit). 

If you’re married, both you and your spouse can withdraw up to $10,000 each to apply to the purchase of a first home, as long as you both meet the above qualifications. 

If you’re still not sure, don’t worry. When you enter the info from your 1099-R, TurboTax will ask you all the right questions to determine how much, if any, of your Roth IRA distribution is taxable.

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