Cashing in IRA's for first deal
I have found my first deal and am ready to write an offer. It's a bank-owned property that needs new carpeting, paint and a good cleaning. I am planning to clean it up and rent/sell it, NOT live in it.
I am counting on my rollover IRA to fund the downpayment, and now it's game time to get those funds available as cash in hand.
I have:
-$14k in a traditional IRA
-$5k in Roth IRA
I have pre-approval from my bank for a conventional loan in my name for $80,000 purchase price ($12k down, $68,000 loan).
I've searched the forums, but haven't found resolution to my exact situation. What are my tax consequences in liquidating my IRA accounts for a down payment? I need some assistance in determining if I can invoke the "first time homebuyer" qualified distribution and what my tax/penalty consequences will be. I am also assuming that I should avoid the self-directed IRA route, since I am counting on sweat-equity to add value to this property.