- quote -

And it is never "without taxes." Only the penalty is excluded.

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

"Erick T" <joikm[at]hotmail.com> wrote:

- quote -

No, you are confusing the rules for itemizing with the rules
for rental property. You will report the income and all
expenses, including interest and depreciation on schedule E.
The net income or loss from the schedule E will then go to
your 1040.

- quote -

Yes

- quote -

That exception to the early distribution penalty is not
available with a 401k but is available with an IRA.

Linwood Fordham EA

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

an_ordinary_guy_158[at]hotmail.com (Bill) wrote:
- quote -

Actually, that is NOT CORRECT. There is NO first-time
homebuyer exemption for 401k accounts, only for IRAs.

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

Thanks to everyone for your great help! Your responses
cleared up all my questions. :-)

Erick

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

joikm[at]hotmail.com (Erick T) wrote:

- quote -

Not correct, the interest is deductible on your Schedule E
as a rental activity expense.

- quote -

Yes

- quote -

You understand wrong. Withdrawals from your 401k plan (if
still working) are limited to "hardships" and are fully
taxable. If you are under age 59-1/2 there is a 10% early
withdrawal penalty. There is NO "first time homebuyer"
exception for 401k withdrawals. That is only for IRA
withdrawals. In addition, you cannot "rollover" a hardship
withdrawal to a traditional IRA, and then withdraw from the
IRA.

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

Erick posted:

- quote -

No, it is not correct.

Since the rented condo will be a business you are operating,
you will be filing Schedule E -- and one of the costs
itemized will be loan interest. [But you won't be able to
enter the interest on a Schedule A, and that's what you may
have read about.]

You should definitely obtain and read Pub 527, Residential
Rental Property, for a better understanding of applicable
tax law and regs.

- quote -

The deductability of mortgage interest on your primary
residence will not be lost because of your investment
property.

- quote -

Basically, that is correct, although you should check the
specific 401k rules for your company.

- quote -

No, your separate purchase of an investment property should
not affect your 401k account or any rights/options available
thereunder.

Bill

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

"Erick T" <joikm[at]hotmail.com> wrote:

- quote -

Not necessarily.

- quote -

There is no first time home buyer exception to an early
401(k) distribution.

--
David M. Woods, EA
Boston, MA 02109

Postings here are general information only and not to be
relied upon as advice.

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

joikm[at]hotmail.com (Erick T) writes:

- quote -

You will be able to deduct ALLyour expenses related to the
condo. Taxes, interest, insurance, advertising, repairs,
supplie, utilities, depreciation, etc.

- quote -

In any case, you may not take money from your 401K account,
without penalty, for the first time purchase of a home. You
may, however, do so if the money were to come from your IRA.

"Jack" - John H. Fisher - TaxService[at]aol.com
Philadelphia, Pa - Atlantic City, NJ - West Wildwood, NJ
My Newsgroups & Boards at: http://members.aol.com/TaxService/index.html

Where Ignorance is bliss, 'tis folly to be wise!=

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

I'm considering buying a condo for investment, and renting
it out. I currently live in an apartment, and will probably
continue to do so for some time. As I understand it, I can't
write off the interest paid on the mortgage for the condo if
I'm not living there. Is that correct?

At some point, I will buy a house as my primary residence,
and I want to make sure that I'm not going to lose any tax
benefits if I buy an investment property now. Will I still
be able to deduct the mortgage interest on the mortgage on
my primary residence?

Also, I have a 401k account, and from what I understand, I
can use some amount of that for a down payment on a first
house without penalty (or taxes?). If I buy an investment
property now, would I lose the ability to use my 401k
without penalty on a down payment?

Thank you,
Erick

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->