Where is best to withdraw money to purchase second home?

[Digger Odell]

I'm over 60 years old and in the process of purchasing a second home. I am paying cash and expect to close end of October. I will be withdrawing the money (around 225K) from my mutual funds. Probably from a high yield bond fund I have had for many years. In the spring, I hope to sell my first home and replace most of this money in my mutual fund.

So here is my question. I have enough money in my IRA mutual fund to cover this purchase as well as in my regular account. Since I am over 59 and a half does it make financial sense to take the money from my IRA or should I leave that alone and take it from my regular account?

Appreciate any help and advice anyone can provide.

[Trevor Ewen]

@Digger Odell

I think @Doreen Chaisson has a point. This is a good question for someone much more familiar with your financial plan.

My gut reaction says it's better to take it out of the regular account, Assuming you are going to live-in or use this home, the IRA funds would be taxed upon withdrawal. Given that you will leave the funds in the account, they are free to grow in their mutual funds with no tax penalty until withdrawal.

The funds in the 'regular account' will instead pay taxes on dividends yearly (unavoidable) and capital gains whenever you make a sale. Capital gains is taxed lower than income, so I think it would be advantageous if everything else is the same.