Qualified Acquisition Cost

Qualified Acquisition Cost

An early withdrawal from an IRA that is used to buy or build a home and/or to pay appropriate closing costs. While early withdrawals are usually subject to penalties and/or excise taxes, qualified acquisition costs are exempt from both of these.
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The distribution must be used within 120 days for qualified acquisition costs of the principal residence of a first-time homebuyer.
A qualified first-time home buyer distribution is any payment or distribution received by an individual to the extent it is used to pay the "qualified acquisition costs" of acquiring the "principal residence" of a "first-time home buyer." A first-time home buyer can be an individual, a spouse, or any child, grandchild or ancestor of the individual or spouse.
A lifetime $10,000 limitation is imposed "for qualified acquisition costs."[33] The distribution from the IRA must be used for such purpose within 120 days of withdrawal.
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