exception to 10% penalty on early withdrawal

[grandmabee]

is the first time home buyer ...not owned a home in last two years or is it ever owned a home.

 

also if I am thinking correct they must have spent the amount they are excluding from penalty.  so if they took out 8,000 and only had shown 5,000 on closing for down and closing cost then penalty would only be waived on the 5, 000. 

 

TIA

[Terry D EA]

Need a little more information here. Is the early withdrawal from a 401K, IRA, or Roth IRA? There are different treatments. If you are talking about a traditional IRA, then yes the amount taken and spent on the actual purchase of the home is excluded. I am fairly sure the reaming amount not spent on the home purchase would be subject to the 10%.

[kcjenkins]

I'm confused.  Early withdrawal of what? IRA?  Pension plan?  The first time home buyer rules do apply to "not owned a home in last two years" 

[Pacun]

Assuming you are talking about an IRA, yes, you don't pay the penalty up to 10K on money used on the acquisition or building of a house. If you didn't own a house for the last 3 years, you are considered a new buyer.

 

Now that you mention 2 years, I am confused, so it could be 2 years or 3 years.