IRA Can Be used For Down Payment

IRA Used For Home Down Payment

IRA Used For Home Down Payment

It seems that everyone knows that if they take out funds form an IRA before they reach 59 and ½ years of age, they will have to pay a ten percent tax penalty to the IRS.

Good news is that if you are a “First Time Home Buyer” (Someone that has not owned a home in the past 2 years), The IRS allows you to withdraw up to $10,000 for singles and if you are married and your spouse has an IRA, they can also withdraw up to $10,000, for a total of up to $20,000 combined. This withdrawal has a lifetime limit and can only be used for the purchase of a home.

The withdrawal is available to people that are buying, constructing, or remodeling a first home. The first time home buyer cannot have had any past dealings with the home. Likewise your spouse cannot have any past interest or dealings with the property to be purchased.

In most cases the withdrawal will be used for a down payment, closing cost or mandatory home repairs. But it could also be used to increase a down payment so that you have more than 20% equity in your home and eliminate Mortgage insurance.

If you are a first time home buyer, you may still have to pay some taxes. Most traditional IRA contributions are made before taxes, so the taxes have to be paid when the money is withdrawn. Roth IRA’s, on the other hand are invested with after tax dollars, so no tax should be due when the first time home buyer withdraws funds.

Also, you can help children, parents, grandchildren and grandparents using your IRA to help them with the down payment.

As always, I have to say that if you consider this contact a tax professional or attorney. By telling you that, I stay out of trouble if things go wrong.

If you are a first time home buyer and want to explore your options to buy your first Texas Hill Country Home just give me a call at (208)830-7991

Think like a Home Buyer

How to Think like a Home Buyer

Think Like a Buyer

Think Like a Buyer

I read a great book a few years ago; it was called “Stop Acting like a Seller and Start Thinking like a Buyer”.   The book was about retail sales and had nothing to do with real estate, or so I thought.   If you want to sell your home, which is exactly what you should do.  You should “Think like a Home Buyer”.

When a home buyer goes to a Realtor®, they have specific things they ask for such as 3 bedrooms, 2 baths, garage, play room, game room, etc…  But is this what they really want?  Actually they want a 3 bedroom house with a large master bedroom, 2 bath house with large tile shower, 2 car garage with work shop and fluorescent lights, play room that can hold a large pool table and wet bar.   You get my point.

So you ask how this benefits me in selling my home.   Well it can be very beneficial.  You need to learn how to play to your audience.  You need to have a frank discussion with your agent about what buyers really want in a home.

Also another thing you should do is invite people you know to your home to give you an honest opinion about your home and how it feels to them.  I suggest they be people you know, but not close with.  The reason is that close friends may not give you honest opinion, because they may not want to hurt your feelings.  You need to tell them upfront that you want an honest opinion.  Don’t get offended; just take heed to what you are told.

There are many buyers and they all have different needs.  You agent needs to market your homes strong points, so that they can decide if they want to look at your home.  Remember a few paragraphs ago when I said “What they actually want”?  If your realtor just lists the number of bedrooms and bathrooms, but does not make comments about your homes strong points, this is doing you a disservice.

Here are a few of the things that I have noticed most home buyers want:

  • Easy access to work, market, school and recreation.
  • A good quality home at a great price.
  • A prestigious home that will impress their friends and family.  The more luxury features the happier they are.
  • People look for a secure place to live; they don’t want to be in a neighborhood that they are scared to go outside.
  • A beautiful home outside.  People want to have the best looking home in the neighborhood.
  • Most people want privacy, believe it or not, statistics show that homes with privacy fences sell much quicker than homes without privacy fencing.
  • Entertainment possibilities, People always envision friends coming over for a back yard barbecue or a Thanksgiving dinner.
  • Access to schools, colleges and universities.  People are interested in the quality and proximity of these.
  • Healthy living is a must for many.  People like areas that have jogging paths, bicycle trails and gyms close by.

If your home has any of these features, it should be pointed out clearly to buyers in all of your marketing efforts.  Discuss these with your Realtor® and make sure he points them out to perspective buyers.

Give me a call at (208)830-7991 and I will be glad to help you sell your home.

How to Pick a Home

How to pick a home

What, where and why are the main considerations when you are picking your first home.   I suggest that you decide where 1st.


When you are deciding where you want to live it can be tricky.  You want to live in a place that suits your lifestyle.

Do you have a commute to work?  If yes, then maybe you want to investigate traffic patterns.

Do you have kids?  Then maybe you want to look for school systems that offer the best education.

You get my point; basically you have to look at how you live and what is important to you to decide where you want to live.


I suggest you look at what your needs and wants are.  Your needs should rate higher than your wants.   Also, if you plan on moving into a larger house later or plans on moving you want to discuss resale possibilities with your Realtor.

When you are looking at the “What” aspect, you need to know what it is you want.  I suggest you make a list of everything that you would ever want and then rate them.  Put a star next to the things that you need.


When you are analyzing your potential home ask yourself why this home is better than that one.  I suggest that you narrow your home search down to two possibilities, and then ask your realtor to show them to you again.  This will help you clarify the differences in your mind and solidify the fact that you are getting the best home for you.

If you are thinking of buying your first home then I suggest you make up a home comparison chart.   I suggest you use one similar to this one.   The reason I suggest using a comparison chart is that you will look at many homes and sometimes it is hard to remember the details on each home.  This checklist will help you remember the home features and stay on track to buy the perfect house.

If you need help contact Tom Ashworth @ (208) 830-7991.

Standard Deductions or Home Mortgage Interest Deduction

The age old question: “Should I itemize or take the standard deduction on my income taxes.  Taking a look at these requires you to do your taxes both ways, but it can save you thousands of dollars.   People that earn over $75,000 a year usually itemize their deductions, but with lower interest rates on home mortgages; “is this wise?”Standard or Itemized

$11,900 is offered to married couples filing jointly and $5,950 is available for singles as a standard deduction.   Every person can expect this deduction, so you need to get more than this to consider itemizing.

A married couple filing jointly on their taxes that has a $150,000 mortgage with a 3.5% interest rate would have paid $9,250 in taxes and interest.  Therefore the standard deduction would give them $2,650 more than itemizing.    If that couple were in a 28% tax bracket, they would have earned $742 more using the standard deduction.

People used to count on this deduction a “No Brainer”, but then again interest rates were much higher, so the deduction was larger.  That is why you should analyze whether would be best in your situation.    There are so many things to consider that you should consult a tax specialist.  If you can save $700 then why not pay a tax specialist $200 for advice.

You have to add all your itemized deductions to make sure that it is actually beneficial.   For instance you would add home office, medical, charitable contributions, losses and other things together to make up your itemized deduction.  If that is more than $11,900 for a married couple or more than $5,950 for a single person, then you should probably itemize.

Escrow and Closing Cost Basics

Escrow and Closing

When you want to buy our sale your home, you may be surprised about how many fees there are and how complex the process is.   The closing process is designed to make sure that everything in the purchase and sale agreement is performed legally per the contract.    The process will also assure that everything is done and there are no surprises when the title is being transferred.

Many times buyers and sellers in the Texas real estate market are surprised and have concerns about all the escrow and closing cost involved in buy or selling their home.  Escrow and closing cost refer to expenses that occur during the process of transfer of title, obtaining a mortgage and inspecting the property.

Closing Cost

  • Title Insurance Premium
  • Realtor Commissions
  • Transfer Charges
  • Assumption Charges
  • Recording Fees
  • Loan Fees
  • Tax Proration’s
  • Insurance
  • Pest Inspections
  • Surveying the Property
  • Home Warranty
  • Home Inspection
  • Appraisals
  • Option Fees
  • Escrow Money – Money held in trust account to insure both parties have “skin in the game”, so to speak.

Escrow Cost

I have heard many complaints about closing and escrow cost, but it is necessary to insure that safety of the home buying process.    Laws now stipulate that Title Company give you an estimated closing statement.   When you buy or sale a home, I suggest you review this so you understand what you are paying for and what you are getting.

If you have any questions regarding the escrow and closing process please contact me at (208)830-7991 or via email at


Is There Any Such Thing as the IDEAL INVESTMENT?

Horseshoe Bay Rental Property

Horseshoe Bay Rental Property

In today’s market rental property could be the IDEAL investment.  Rental property , especially in Horseshoe Bay, offers a high rate of return when compared to the ups and downs of the stock market.

In this article I am using IDEAL to mean “Identify the Advantages of rental homes”:

  • Where can you have someone else pay for your investment?  Rental homes the monthly rent goes toward paying your expenses and generates your return on investment.
  • You can depreciate your property and get a tax shelter.
  • Your equity in the home grows monthly as the mortgage is paid.
  • Homes are worth a lot more now than they were 20 years ago.  So you will get appreciation as your home goes up in value.
  • And of course you get leverage by using borrowed funds to grow your wealth.

If taken as a whole, the items mentioned above make rental property a fantastic investment.   Rents have been on the rise due to people losing their home to foreclosure and bankruptcy.  People still have to live somewhere, so the rent market is booming now.

Right now in Burnet Texas there is a huge demand for rental properties.  Let me help you learn how to be an Real Estate investor.