His Well Ran Dry at 68. The $25,000 IRA Withdrawal Made More of His Social Security Taxable.

A retired homeowner over the age of 68 faces a dilemma when his well, which he relies on for water, stops functioning. To repair the well, he needs to withdraw $25,000 from his traditional IRA. This withdrawal increases his adjusted gross income (AGI) and makes up to 85% of his Social Security taxable. The cost of the well repair is considered a capital improvement but does not provide an immediate tax deduction for the home.

If the homeowner remains in the house for life, the improvement also offers no income-tax benefit during retirement. If he sells the house later, the cost will lower the taxable gain on the property. Assistance programs exist for rural homeowners, such as USDA-backed rural programs and Section 504 repair assistance, but the homeowner's specific eligibility will depend on his income and location.