IRA Withdrawal

First-time homebuyers are allowed to withdraw up to $10,000 from their Individual Retirement Account (IRA) without paying the standard 10% early withdrawal penalty, provided the money is used for the down payment or closing costs. (d) Exclusion of Gain: The most significant benefit is the exclusion of capital gains tax on the sale of a primary home. If a person has lived in the home for at least two of the last five years, they can exclude up to $250,000 of profit from their taxable income. For married couples filing jointly, this exclusion doubles to $500,000. This means most families pay zero federal taxes on the profit when selling their house.