You may be unaware that special provisions under the
tax laws allow you to withdraw funds from your retirement
accounts to buy real estate.
1. First-time homebuyers can tap their IRA without tax
You can withdraw up to $10,000 once in a lifetime from your
IRA without tax penalty to purchase a principal residence
for yourself or for a family member. A family member is
your grandchild or ancestor
your spouse’s child
your spouse’s grandchild or ancestor.
The homebuyer must be someone who has not owned a home in
the previous two years. If the homebuyer is married, the
spouse must not have owned a principal residence during
that period, either.
2. You can get a loan tax-free from your retirement funds
to buy real estate, even if it’s not a first-time home.
If you are you self-employed, or a small business owner you
get even more flexibility to tap into your retirement
money. Your business does not have to be elaborate.. for
example, you can operate a part-time business as a sole
proprietor, a 1099 income consultant, or as an independent
As long as you are the only employee in your business you
can establish a Self-Employed 401(k) plan. You can then
transfer funds from your IRA, qualified pension plan, like
a 401(k) or a 403(b) tax-sheltered plan, into your Self-
Employed 401(k) plan. Assuming your plan has a loan
feature, you may borrow up to $50,000 from your account
balance (or 50 percent, whichever is less). The loan will
stay tax-free and penalty-free, as long as the money is
paid back on time. You can use the loan for any purpose,
but if you use the money to buy a primary residence, the
loan can be extended from the regular 5 years payback
period to 10 years.