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Message
IRA cash in for home purchase
Posted on 9/8/21 at 10:36 pm
Posted on 9/8/21 at 10:36 pm
My Dad is 75 and just lost his home in Laplace due to the Hurricane. He would like to cash in his IRA to use for a down payment on a home and and make mortgage payments until we can get his house repaired and sold and then use the proceeds to pay off the mortgage. His current home is payed in full What are the penalties or tax issues if he goes this route. He is only living off social security now.
3
Posted on 9/8/21 at 10:40 pm to The Don
Likely wouldn’t be any penalties. If it’s a Roth IRA, then there wouldn’t be any tax liability either. If it’s traditional, then he would be taxed on the withdrawal as income.
Posted on 9/9/21 at 5:48 am to The Don
Sorry to hear about your father. Prayers to you and your family.
Posted on 9/9/21 at 8:22 am to LSU1018
quote:
Likely wouldn’t be any penalties. If it’s a Roth IRA, then there wouldn’t be any tax liability either. If it’s traditional, then he would be taxed on the withdrawal as income.
If the Dad is 75 and only on social security, I think that would mean it has to be a Roth IRA. RMDs apply to traditional IRAs for 72+.
Posted on 9/9/21 at 11:27 am to notsince98
Thanks. We are looking for his paperwork to determine if it is a Roth
Posted on 9/9/21 at 12:41 pm to The Don
Sorry to hear this situation for your family. I grew up in LaPlace so hits 'home'.
Make sure that he factors in a depressed housing market in LaPlace (ie, don't expect to be able to see repaired home for pre-Ida market rates and likely depressed pricing in LaPlace for years), for consideration in the new home purchase / mortgage payoff.
Perhaps may want to consider renting old home once repaired, as suspect will be more renters than buyers in short term. May buy some time for housing market to rise again. Of course, that comes with its own things to think about (ie, the right renter, credit issues, home maintenance, etc.)
Need to consider homestead exemption can only be applied to hold home so new home RE taxes will go up until old home is sold.
Won't repeat what previous posters have said on Roth vs. Traditional. Hope it is former for him.
Make sure that he factors in a depressed housing market in LaPlace (ie, don't expect to be able to see repaired home for pre-Ida market rates and likely depressed pricing in LaPlace for years), for consideration in the new home purchase / mortgage payoff.
Perhaps may want to consider renting old home once repaired, as suspect will be more renters than buyers in short term. May buy some time for housing market to rise again. Of course, that comes with its own things to think about (ie, the right renter, credit issues, home maintenance, etc.)
Need to consider homestead exemption can only be applied to hold home so new home RE taxes will go up until old home is sold.
Won't repeat what previous posters have said on Roth vs. Traditional. Hope it is former for him.
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