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November 20, 2024
Question

Does Roth withdrawal count as income in the Capital Gains tax equation?

  • November 20, 2024
  • 1 reply
  • 0 views

In 2025, Husband and wife (MFJ) will sell home and build a new home.  The profit will be less than $500K.  If we withdraw funds from our Roth IRA to fund building the new home,  will that withdrawal count as income on our tax return - thus affecting our eligibility for zero Capital Gains tax on the sale of our home? 

    1 reply

    DoninGA
    Employee
    November 20, 2024

    You must be 59 ½ and have held your Roth IRA for at least five years before you withdraw investment earnings tax-free and penalty-free. You can withdraw your Roth IRA contributions at any age because you've already paid taxes on that money.

    fanfare
    Employee
    November 29, 2024

    If you take out no more than you contributed to the Roth IRA, that is a return of principal, not income.

     

    @annh89