Can you buy a second home with IRA money?

The IRS has strict rules about how you may use IRA money if you are under 59 1/2. Early withdrawals may be made from your IRA for two reasons: to pay for a college education and to buy your first home. If you choose to deduct money from your IRA to pay for your first home, you can use $10,000 penalty free. If you are looking to buy a second home, then you wouldn't qualify for an early withdrawal from your IRA since you are not a first-time home buyer. A home buyer must be purchasing his or her first home or purchasing a home after not owning a home for more than two years previously.

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