Q: I'm 60,and withdrawing from IRA to purchase lot next door. Will I owe taxes?
I am purchasing the lot to adjoin to my primary residence that I have owned for 11 years. It will become part of my primary residence
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A:
When you withdraw from your IRA at age 60, the amount you take out is generally subject to federal income taxes. Since you are over 59½, you won’t incur the early withdrawal penalty that applies to younger individuals.
Using the funds to purchase a lot to add to your primary residence doesn’t change the tax treatment of the withdrawal. Florida does not have a state income tax, so you won’t owe state taxes on the distribution. This means only federal taxes will apply to the amount you withdraw from your IRA.
Be sure to include the withdrawal in your taxable income for the year, as it may affect your overall tax bracket. It might be helpful to review IRS guidelines or consult with a tax advisor to understand how this withdrawal will impact your specific financial situation.
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