IRAs and first time home buyer?

I currently own the home I'm in. I recently got married and my wife has never owned a home. We're planning to purchase a new home together and to avoid PMI, I wish to take money from my traditional IRA to go towards the down payment. I’ve read IRS Pub. 590 and it appears that since my wife has not owned a home I can take up to 10K$ from my IRA. My wife doesn’t' have an IRA account. The wording is somewhat confusing so I'm posting the relevant text from 590 below. Can anyone offer advice on whether or not we can do this what being penalized? Thanks Here's the text from Pub. 590: First home. Even if you are under age 591/2, you do not have to pay the 10% additional tax on up to $10,000 of distributions you receive to buy, build, or rebuild a first home. To qualify for treatment as a first-time homebuyer distribution, the distribution must meet all the following requirements. 1.It must be used to pay qualified acquisition costs (defined later) before the close of the 120th day after the day you received it. 2.It must be used to pay qualified acquisition costs for the main home of a first-time homebuyer who is any of the following. a. Yourself. b. Your spouse. c. Your or your spouse’s child. d. Your or your spouse’s grandchild. e. Your or your spouse’s parent or other ancestor. 3.When added to all your prior qualified first-time homebuyer distributions, if any, total qualifying distributions cannot be more than $10,000. Qualified acquisition costs. Qualified acquisition costs include the following items. · Costs of buying, building, or rebuilding a home. · Any usual or reasonable settlement, financing, or other closing costs. First-time homebuyer. Generally, you are a first-time homebuyer if you had no present interest in a main home during the 2-year period ending on the date of acquisition Qualified of the home which the distribution is being used to buy, build, or rebuild. If you are married, your spouse must also meet this no-ownership requirement.

7 months ago - 2 answers