Can I combine my IRA First-Time Home Buyer Exception with my father's for purchasing?

Thanks so much for the quick response! I didn't realize we'd still have to pay income tax on the withdrawals - that's really good to know. Does that mean the withdrawal will count as part of our income for the year? And is there any specific documentation we need to keep to prove the money was used for the home purchase?

Yes, the withdrawal will be included in your taxable income for the year you take the distribution. Your IRA administrator will send you a Form 1099-R showing the distribution, and you'll report it on your tax return. The amount will be added to your other income and taxed at your regular income tax rate. As for documentation, definitely keep all records related to your home purchase - the settlement statement, purchase agreement, receipts for closing costs, and any other expenses paid with the IRA funds. You don't submit these with your tax return, but you should keep them in case of an audit. Also make sure you use the funds within 120 days of the withdrawal as required by the IRS.

Did it help with figuring out if the combined withdrawals would cause any issues? I'm in a similar situation but wondering if having multiple people use their exceptions for one purchase might trigger some kind of audit flag.

How accurate was their information? I'm always skeptical about tax tools that aren't directly from the IRS. Did their advice match what you eventually filed on your taxes?

It definitely helped with the combined withdrawals question. They confirmed that multiple people can use their first-time homebuyer exceptions toward the same property purchase without issues. Each person has their own $10,000 lifetime limit, and there's no rule against pooling these funds for one home. Their information was extremely accurate. I was skeptical too at first, but their explanations cited the exact tax code sections and IRS publications. When I had my taxes prepared by my regular accountant, everything matched exactly with what taxr.ai had told me. They even pointed out some closing costs I didn't realize could be covered under the qualified first-time homebuyer expenses.

How does this service actually work? I've literally spent hours on hold with the IRS before giving up. Are you saying they somehow get you past the hold queue?

No way this actually works. I've tried everything to get through to the IRS and always end up with the "call back later" message or sitting on hold for hours.

It works by navigating the IRS phone system and waiting on hold for you. When an actual IRS agent picks up, you get a call connecting you directly to them. I was skeptical about how it could work too, but basically they have a system that handles all the waiting and menu navigation. Yes, they absolutely get you past the hold queue! That's exactly what they do - they wait on hold so you don't have to. When I used it, I got a text message when an agent was on the line, and then they connected me immediately. Went from spending hours trying to reach someone to having an actual conversation with an IRS representative in minutes.

Oh that's really helpful! My dad sold his house about 3 years ago and has been renting since then, so it sounds like he would qualify. Does the money have to go directly to the home purchase, or can he just give it to me and then I use it for the down payment?

Sounds like your dad would qualify since he's been renting for the past 3 years. That meets the IRS definition of a first-time homebuyer. Regarding the funds, your father should take the distribution directly from his IRA and then use those funds toward your home purchase. While there's no specific requirement that the money has to go directly from the IRA to the title company, the IRS does look at the purpose of the withdrawal. The safest approach would be for him to document that he's using the funds for your qualifying first-time home purchase. Have him keep records showing the withdrawal and then either a gift letter to you or direct payment toward closing costs or down payment.

I used mine 3 years ago without issues. Just make sure you keep all documentation: IRA withdrawal statements, closing documents, proof the funds were used for the home purchase within 120 days, etc. As long as you're following the rules and have documentation, you should be fine even if audited.