First time homebuyer Tax Law: Need help

[Robin Edwards]

My wife and I are looking for a house hack property in Houston or Galveston.  This will our first time buying a home, so we are very green at this.

We are using my IRA account to fund our down payment. I understand that first time home buyers are eligible to withdraw up to $20,000 penalty free. However, I am can't find any clarification on these two questions.

1)  Do we have to pay taxes on the $20,000 withdrawal as it is recognized as income?

2)  Do we have to live in the property to qualify for the penalty free exemption?

Anything else we need to know?

Thanks,

Frank & Robin

[Dmitriy Fomichenko]

Hey Robin, you got some good info already here. Just to clarify on your #2: I don't think what Paul state is accurate for your situation. That applies to exclusion on capital gain taxes for primary residence. However if you are using funds from an IRA for the purchase of primary residence - it has to be your residence from day one, so yes, you have to be living in the property.