[srivatsann]

Hi,

I am US resident for tax purposes and am younger than 59.5. I own a home in city A which has been rented out. I am paying mortgage for it.

I want to purchase a home in the city B, where I am working now. This will become our primary home.

I withdrew some money from my IRA in 2013 to pay for the home in city B. Is $10000 of my withdrawal eligible for "no penalty" since it was used for our future primary home. What proof should I produce to claim that when filing 2013 taxes?

Regards
Srivatsan

[AtlantaTaxExpert]

The key is WHEN did you buy the house in City A? If it was more than five years, then no problem with getting $10K from IRA with no penalty.

Less than five years requires in do some research for a proper answer.

[srivatsann]

Hi AtlantaTaxExpert,

Thanks for the response. The construction of home in city A began in November 2010 and was completed and handed over to us in November 2011. It is not more than five years yet.

Regards,
Srivatsan

[AtlantaTaxExpert]

Then probably not. The IRS says you must be a NON-home owner for FIVE YEARS for the purchase to be considered a FIRST HOME BUYER.

[srivatsann]

Thanks for your response ATE. I have one more query.

In 2012 March, I had contributed 5000 USD towards 2011 IRA. While filing 2011 taxes, I got to know that there is NO tax benefit of my contribution to IRA. So, in 2013 January, I withdrew that 5000 USD. My IRA custodian returned 5000 and indicated that $51 is taxable income. Should I file amended return for 2012 and report the $51 or should that be reported along with 2013 Federal return?

Thanks
Srivatsan

[AtlantaTaxExpert]

If you withdrew it in 2013, claim the $51 on your 2013 tax return.