Took IRA distribution for 1st time home, but closing fell through. I returned the funds after the 60 days. Will I be hit with the 10% penalty for going over 7 days?

Forum|Forum|7 years ago
June 1, 2019
1 reply
0 views

The closing fell through because the home owners association didn't want to accept FHA loans.

TurboTax Premier Online

Employee

Because the purchase was cancelled, the 60-day rollover deadline becomes extended to 120 days. Completing the rollover on the 67th day following the distribution is within the deadline. (This assumes that you indeed met the qualifications to be a first-time homebuyer were it not for the fact that the purchase fell through.)

Provided you did not roll over any other IRA distributions in the 12 months proceeding this distribution, this distribution was properly rolled over. Simply report the rollover as you would any other by entering the Form 1099-R and indicating in the follow-up that you rolled the distribution over.

R

rdelcid24Author

Employee

Thank you for your comment dmertz. After inputting the 1099-R provided by the custodian, we are still being penalized 10%. What type of supporting documents can I provide the IRA to provide the sale was not finalized and we are indeed first time home buys? Additionally, do I pay the 10% now and when the 5498 is sent to the IRS by the custodian will I be reimbursed for that dollar value?

Thank you again for your input.