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I have a question that I haven't really been able to find a clear-cut answer to.....
If you have a traditional (not Roth) IRA, I know the Federal govt. has a provision where you're allowed a one-time early withdrawal of up to $10,000 from it for the purpose of purchasing a new home, if you fit its definition of a "first time home buyer". I also understand this is extended to other expenses associated with such a purchase (such as an immediate need to pay for some type of major repair, in order to start living in the home after the purchase). You'll, obviously, still have to pay the taxes on this money, but you won't be subjected to the usual early-withdrawal penalty.
Where it gets unclear to me is whether one could withdraw the money from the IRA to do an important repair after the settlement is complete, and avoid the penalty by providing the IRS with the receipt(s) for the repair work that was done?
I keep reading conflicting advice on this scenario, with most people hinting that for this money to successfully be used without the penalty, it has to be paid at the time the home is actually purchased? (So I guess they're saying using it for a repair would only work if you negotiated something into the contract stating you were going to put down an additional $X amount at closing for the purpose of having the item(s) repaired - and then used the withdrawn IRA money to pay that?)
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