Save time with our cheat sheets, fact sheets, checklists & books!

February 16, 2009

Principal Residence

Your Guide

Share on print
Print
Share on facebook
Share on twitter
Share on pinterest
Share on linkedin

Definition

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.

A distribution from an IRA that is a first-time home buyer distribution used to buy, build or rebuild a principal residence is not subject to the early distribution penalty A loan from a qualified plan or 403(b) cannot extend for a repayment period of more than five years , unless that loan is used for the acquisition of a principal residence

Referring Cite

IRC §72(t)(2)(F); Treas. Reg. §1.72(p)-1, Q&A-5 through Q&A-8]

Additional Helpful Information

  • A first-time homebuyer distribution used to buy, build or rebuild a principal residence that is a first-time home is not subject to the early distribution penalty.
  • A loan is not required to be secured by the dwelling unit that will ,within a reasonable time, be used as the participant’s principal residence in order to satisfy the requirements for a principal residence plan loan.

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.

Share on facebook
Share on twitter
Share on pinterest
Share on linkedin
Share on print
More

Keep Learning

Annual Benefit Limit

Definition The annual benefit limit for defined benefit plans is the lesser of: A) 100% of the participant’s average compensation for his or her highest

Be among the first to know when

IRA Rules
Change