May 2008 Vol. 3 No. 5
• Don't Get Stuck Paying Extra Tax! • May's Home Value Improver • About Us

Don't Get Stuck Paying Extra Tax!

Real estate is a great investment, right? Since most people feel this way, it's tempting to want to tap every money source available to you. Your retirement accounts, those collections of cash you otherwise think of as untouchable, seem suddenly appealing when you're financing a house. To help make a down payment on a house, many people plan on using money taken from their IRA or 401(k). Think twice before doing this - you may suffer unintended tax consequences.

Remember that the government does not collect tax on these funds because it is in everyone's best interest that people save for their later years. So when you use the money before retirement, Uncle Sam wants his share. In fact, he wants a little more than his fair share. In addition to taxes on withdrawals at your regular tax rate, the IRS imposes an additional 10% penalty. Ouch! There are some exceptions. (If you are older than 59 ˝, you can take the money out without paying penalties.) A common misconception is that these exceptions include a withdrawal for home purchases. But that isn't completely true.

The government's favorite home shopper - the first- time homebuyer - is exempt from paying the additional 10% penalty. (This is according to Section 72 (t) of the IRS code.) Unfortunately, the maximum amount that may be treated as a qualified first-time homebuyer distribution is $10,000, and the exception applies only to a first-time homebuyer. In addition, this exception applies only to withdrawals made from an IRA, not a 401(k).

Before you decide to access funds from any type of retirement account, be sure to consult your accountant or tax professional. You don't want to be hit with any surprises come tax time!

May's Home Value Improver

Spruce Up Your Guest Room
With summer just around the corner, the season of visiting relatives and friends is upon us. Make your guest room a place where people will feel welcome and comfortable. They are already away from the comforts of home, so a peaceful place in your home should feel wonderful.

Think Color
Even if color matching is not your thing, choose a color that is central to the guest room and use it as much as possible to pull the room together. For instance, if a piece of furniture is a soft green, try to coordinate some pieces or décor in the same color.

Create a Cozy Bed
Whether you have a giant king-sized bed, or a small day bed, lots of pillows and a fresh comforter cover can make a big difference in how the room looks. Some people like to use white bed sheets and a selection of different color pillow cases so they can match any décor they have without having to redecorate the bed completely.

Relocate Storage
Let's face it, most of us like to pile up extra clothing and other storage in the guest room. Why not? It's only in use when you have visitors. However, when your guests arrive, it's time to temporarily relocate that storage. Be sure to find another place for the clutter while your guests are visiting. Your mother- in-law does not want to look at a pile of old CD cases in the corner for the week she's visiting. (Plus, you don't want to hear about it at dinner!)

Avoid Clutter
If your guest room is the place your store your knick- knacks and other collectibles, find another home for them. Guests need lots of surface space for their things. After all, your guest room is about to become their bedroom, living room, and medicine cabinet.

Make a Place to Sit
If there is space in the guest room or a cozy chair, your guest will have a comfortable place to sit and read, or talk on the phone in privacy. If you don't have the space, bench at the end of the bed will be a welcome spot for an extra blanket, as well as serve as a place to sit.

Your guests will appreciate your making their stay as comfortable as possible. Plus, your guest room will be nice enough that you may want to "vacation" there yourself to get away from the family.

As we ease into the Memorial Day weekend and the start of summer, it's a good time to take inventory financially, emotionally and spiritually. Recently in the news we have heard about tragedy in China and a troubling diagnosis for Ted Kennedy.

These events put things into perspective for me and inspire me to stop getting hung up on trivial things. I hope they do the same for you. Try to do something enjoyable every day, even if it's something as simple has lunch with a friend or calling someone you haven't talked to in a while. Start this weekend!

And as always, please feel free to call or email anytime for more information on any mortgage topic!

Best regards,
Debbie Siegel
Westchester Mortgage

P.S. You're receiving this E-Newsletter because you have a prior relationship with me or with Westchester Mortgage. If I've sent this to you in error, or if you want to remove yourself from the list at any time, just click the "SafeUnsubscribe" link at the bottom of this e-mail.

Click here to read my "Mortgage Minute" in's monthly newsletter. This month's topic: "FICO 2008."

Westchester Mortgage simplifies the complex and often stressful process of finding the right loan program based on your financial goals and situation.

We provide unbiased advice regarding mortgage products offered by a wide variety of lenders. Our relationships with numerous banks and lenders allows us to select from thousands of programs to find the one that best meets your needs.

Follow this link for more information.

Enter your email here
to subscribe to

321 Walnut St. #412, Newtonville, MA 02460
617-965-1236 Fax: 617-965-1594

Copyright © 2006
Westchester Mortgage.
All rights reserved.