10% IRA penalty

[lovesledz]

Married couple purchases a home together, and the husband takes an early distribution from his IRA for this purchase. He has never owned a home before, but his wife owned a home that was being held in trust for her minor son. (at least that's what she said) Does the husband qualify for an exception to the penalty? I'm afraid I know the answer, but thought I would get opinions.

[solomon]

Never owning a home is not the rule for this exception - not owning one in the prior two years is what counts.

[lovesledz]

Never owning a home is not the rule for this exception - not owning one in the prior two years is what counts.

Yes, I do know that, I guess I wasn't clear in my post. My question is, because his wife had some type of ownership interest in the past two years, does that make him ineligible for any exclusion of penalty.

[solomon]

Yes, I do know that, I guess I wasn't clear in my post. My question is, because his wife had some type of ownership interest in the past two years, does that make him ineligible for any exclusion of penalty.

Yes. The wife must not have had ownership in the previous two years.

[veritas]

Was the wife's house

her principal residence within the meaning of Section 121?

Code Section 72(t)(8

[Lion]

Any House?

An ownership interest in any house anywhere disqualifies as a first-time home buyer? How about inheriting an interest in a rental house in another state, never a primary residence? Can taxpayer purchase a primary residence during 2008 and qualify for the $7,500?

[solomon]

An ownership interest in any house anywhere disqualifies as a first-time home buyer? How about inheriting an interest in a rental house in another state, never a primary residence? Can taxpayer purchase a primary residence during 2008 and qualify for the $7,500?

Must be a principal residence. Ownership in a rental does not preclude the credit.

[Lion]

Thank you

Thanks. I've been reading and reading too much and starting to disbelieve myself.