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February 23, 2009

First-Time Home Buyer

Your Guide

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Definition

An individual (and if married, such individual’s spouse) who had no present ownership interest in a principal residence during the 2-year period ending on the date of acquisition of the principal residence to which a first-time homebuyer distribution applies.

If a participant is married, his/her spouse must also satisfy the  first-time homebuyer  requirement in order for it to apply

Referring Cite

IRC §72(t)(2)(F); Treas. Reg. § 1.121-3, Treas. Reg. § 1.1034-1(d)(1)

Additional Helpful Information

  • Principal residence may include a houseboat, a house trailer, or stock held by a tenant-stockholder in a cooperative housing corporation  , if the dwelling which the taxpayer is entitled to occupy as such stockholder is used by him as his principal residence. Property used by the taxpayer as his principal residence does not include personal property such as a piece of furniture, a radio, etc., which, in accordance with the applicable local law, is not a fixture.
  • The term “date of acquisition” means the date –
    • on which a binding contract to acquire the principal residence, or
    • on which construction or reconstruction of such a principal residence is commenced
  • Olup v. Commissioner, T.C. Summary Opinion 2005-183:The Tax Court ruled that a married couple was not eligible for the first time homebuyer exception, because one of the spouses owned a principal residence during the previous two-years

Written By

Denise Appleby

Denise is CEO of Appleby Retirement Consulting Inc., a firm that provides IRA resources for financial/ tax/legal professionals. She has over 20 years of experience in the retirement plans field, which includes training and technical consultation.

Denise writes and publishes educational /marketing tools for advisors; available at http://irapublications.com. Denise co-authored several books on IRAs

Denise is a graduate of The John Marshall Law School, where she obtained a Masters of Jurisprudence in Employee Benefits, and has earned 5 professional retirement designations.
She has appeared on numerous media programs, sharing her insights on retirement tax laws.

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