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Form 5329 Exception Code 09: First Home, Up to $10,000

Updated October 17, 2026. Quick answer: Exception code 09 on Form 5329 is for IRA distributions made for the purchase of a first home, up to $10,000. Publication 590-B lists the requirements, and the line 1 instructions give a special rule for Roth IRA first-time homebuyer distributions. You enter the amount on line 2 and write 09 in the space provided.

Form 8606 and Form 8889 for 2025, read line by line: Form 8606 line 15c, Form 8606 lines 19 and 20 and Form 8606 lines 21, 22 and 23.

What code 09 says

Form 5329 Part I is where the additional tax on early distributions is figured, and line 2 is where you show the part of an early distribution that is not subject to it. The instructions list each reason as a numbered exception, and a first home purchase is number 09. Part I itself opens by saying “You may also have to complete this part to indicate that you qualify for an exception to the additional tax on early distributions”.

The instructions describe exception 09 in one sentence: “IRA distributions made for the purchase of a first home, up to $10,000.”

The Roth IRA rule on line 1

If the money came from a Roth IRA, line 1 has an extra instruction. After telling you where to find the taxable part of an early Roth IRA distribution, it says you will also need to include on line 1 of your 2025 Form 5329 a qualified first-time homebuyer “distribution from line 20 of your 2025 Form 8606.” It continues “Also include this amount on line 2 of your 2025 Form 5329 and enter exception number 09.” Form 8606 is explained on the Form 8606 page.

The rule in Publication 590-B

Publication 590-B states the exception: “Even if you are under age 59 1/2, you don’t 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 next) before the close of the 120th day after the day you received it.”
  2. The second requirement concerns whose home it is: “(defined below) who is any of the following.” The Publication’s list is: “Yourself.” “Your spouse.” “Your or your spouse’s child.” “Your or your spouse’s grandchild.” “Your or your spouse’s parent or other ancestor.”
  3. The third requirement counts earlier first-home distributions too: “if any, total qualifying distributions can’t be more than $10,000.”

The Publication also notes “If both you and your spouse are first-time homebuyers (defined later), each of you can receive distributions up to $10,000 for a first home without having to pay the 10% additional tax.”

Costs, buyers and dates

Qualified acquisition costs are defined this way: “Costs of buying, building, or rebuilding a home.” and “Any usual or reasonable settlement, financing, or other closing costs.”

A first-time homebuyer is defined by a look back: “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 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.”

The date of acquisition is the date that: “You enter into a binding contract to buy the main home for which the distribution is being used, or” “The building or rebuilding of the main home for which the distribution is being used begins.”

If the purchase falls through

Publication 590-B adds: “If you received a distribution to buy, build, or rebuild a first home and the purchase or construction was canceled or delayed, you could generally contribute the amount of the distribution to an IRA within 120 days of the distribution and not pay income tax or the 10% additional tax on early distributions.” It continues “This contribution is treated as a rollover contribution to the IRA.”

How to claim it on Form 5329

The instructions for line 2 begin: “Enter on line 2 the amount that you can exclude.” They continue: “In the space provided, enter the applicable exception number”. For this page the number is 09. If you have several reasons, the instructions say “If more than one exception applies, enter 99.” That case is covered on exception code 99.

Where it goes next

Line 2 feeds the lines below it. The form’s caption for line 3 reads “Amount subject to additional tax. Subtract line 2 from line 1”. The caption for line 4 reads “Enter 10% (0.10) of line 3. Include this amount on Schedule 2 (Form 1040), line 8”. So whatever you exclude on line 2 comes out of the amount that line 4 multiplies. The whole of Part I is walked through on the Part I lines 1 to 4 page.

If you are married and both of you must file the form, the instructions say “If both you and your spouse are required to file Form 5329, complete a separate form for each of you.” They add “Include the combined tax on Schedule 2 (Form 1040), line 8.”

Edition and line numbers

This page reads the 2025 Form 5329 and its 2025 instructions, and the 2025 returns edition of each IRS Publication it cites. They are the current files irs.gov served on 2026-10-17, for the tax year 2025 return filed in 2026. Check the tax year printed on the form you are filling in and use the line numbers and exception numbers on that year’s form, because a different year’s form can number or word them differently. For the wider picture, see Form 5329 explained and the overview of early withdrawal penalty exceptions.

Common mistakes

  • Treating the limit as per purchase. Publication 590-B says “total qualifying distributions can’t be more than $10,000.” The Publication adds up earlier first-home distributions as well, so check what you have already withdrawn.
  • Waiting past the deadline to spend the money. Publication 590-B requires that it be used “before the close of the 120th day after the day you received it.”
  • Leaving off the exception number on a Roth distribution. The line 1 instructions say “Also include this amount on line 2 of your 2025 Form 5329 and enter exception number 09.”

Related: Form 5329 explained, Early withdrawal penalty exceptions, Form 8606, and 1099-R box 7 codes.

Sources

Read from the IRS documents linked above on October 17, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.

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