If I have lived in a mobile home for 23 years, can I take money from my ira to buy a stick built hou

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wcarterjr
wcarterjr Member Newcomer

Are there any tax breaks I can use. Lost about 30,000 on sale of mobile home I lived in for 23 years and sold it, then bought home from my mother. Used ira funds to buy the house from her.

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  • Henry
    Henry FreeTaxUSA Agent
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    The good news is that if you sold your mobile home for a loss, then there won't be any capital gains taxes to pay on that transaction. Unfortunately, losses from the sale of personal-use property, such as your home, are not deductible, so you won't be able to use that loss to lower your taxable income.

    If you subsequently took an IRA distribution to buy a new home, how that distribution gets taxed will depend on the situation (such as what type of IRA you have and how old you are). Traditional IRA distributions are taxed when they are taken. On the other hand, Roth IRAs are funded with money that has already been taxed, so you don't usually pay income tax when you take a distribution.

    A 10% additional tax generally applies if you withdraw or use IRA assets before you reach age 59 1/2. You can avoid the early withdrawal penalty if you’re a first-time home buyer taking out no more than $10,000.

    The IRS defines a first-time home buyer as follows:

    "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."

    (see pg 27 of IRS Publication 590-B, 2022 Publication 590-B (irs.gov))

    You will need to decide how these guidelines apply to your situation. As you enter your Form 1099-R information in the software, you will be asked if an exception applies to any early withdrawals that were taken.