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February 16, 2009

Principal Residence

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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.
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