House-Buying Child

Lisa A. Tomaszewski, James Russo

,
Michael Sheehan

Physician's Money Digest, March31 2004, Volume 11, Issue 6

Your child is about to purchase ahome and you would love to give them ahelping hand. However, your money istied up in investments and you are unsureof how to proceed. One possible solutionis to tap into your IRA. An IRA withdrawalis exempt from the 10% penaltytax if the money is used for a first timehome-buying purchase—even if it's notyour home. So long as the home remainsa relative's principal residence, you willqualify. Furthermore, if your spouseowns an IRA, they have the ability towithdraw $10,000 penalty-free from theIRA. You won't have to worry about gifttax liability because of the annual gift taxexclusion.