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Penalty-Free IRA Withdrawals for First-Time Home Buyers

If you've just bought your first house, you and your spouse can both withdraw up to $10,000 from your IRAs without penalty.

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My wife and I are about to purchase a new home. Can we spread the $10,000 withdrawal the IRS allows across my IRA and hers? --L.F., Brooklyn, N.Y.

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You can withdraw up to $10,000 from your IRA penalty-free for a first-time home purchase, and your wife can also withdraw up to $10,000 from her IRA penalty-free. The withdrawals from each IRA will be taxable (except any portion attributable to non-deductible contributions).

With Roth IRAs, you can withdraw contributions tax- and penalty-free anytime. And after you withdraw your contributions, you can each withdraw up to $10,000 in earnings as long as you haven’t exceeded the $10,000-per-person limit for all IRAs. If you haven’t held a Roth IRA for at least a five-year period, the earnings will be taxable.

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