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#12
03-24-2005, 03:10 AM
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 Re: 401k loan tax deduction? Arthur L. Rubin wrote: - quote - > David Woods, EA, ChFC, CLU wrote:
See Dave's comments above.> > The person who said this is on CNBC was wrong. Period. If > > nothing else, interest used to buy your home must be on a > > mortgage secured by your residence. Your 401(k) does not > > and CAN not have a mortgage on your home. > That part is wrong. There's an increase in the loan > duration duration limit for 401(k) mortgage loans, and the > loan must be secured by the house. > (I'm not sure what happens if the 401(k) has to foreclose....) And when in doubt, always ask the 401k plan administrator to send along a 1098 form. ChEAr$, Harlan Lunsford, EA n LA Mon 21 Mar 2005 << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#11
03-21-2005, 04:07 AM
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| Re: 401k loan tax deduction? "Arthur L. Rubin" <ronnirubin[at]sprintmail.com> wrote: - quote - > David Woods, EA, ChFC, CLU wrote:
Arthur, I'm not wrong. A loan from a 410(k) to buy a home> > The person who said this is on CNBC was wrong. Period. If > > nothing else, interest used to buy your home must be on a > > mortgage secured by your residence. Your 401(k) does not > > and CAN not have a mortgage on your home. > That part is wrong. There's an increase in the loan > duration duration limit for 401(k) mortgage loans, and the > loan must be secured by the house. > (I'm not sure what happens if the 401(k) has to foreclose....) is not a mortgage on your home. It's a loan from your 401(k) and you used the proceeds to buy a home. Yes it has a longer duration than other plan loans, but that's based on the usage of the loaned funds. Again, the loan isn't secured by the property regardless of whether it's got the longer duration or not. -- David M. Woods, EA, ChFC, CLU Woods Financial Services Norwood, MA 02062 www.woods-financial.com << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#10
03-18-2005, 11:07 AM
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| Re: 401k loan tax deduction? "Arthur L. Rubin" <ronnirubin[at]sprintmail.com> wrote: - quote - > MPeter wrote:
On what grounds? Is the mortgage secured by the property?> > Last year my wife and I purchased a home. Part of our > > downpayment came from a 401k loan. > > > I watched a show on CNBC this evening that said that the > > interest on a 401k loan is tax deductible if it is used for > > the downpayment on a home. > I think you may be confusing two different issues. > A disbursement from a 401k is NOT subject to the early > withdrawal penalty if used toward purchase of a "first" home > (and under $10,000), although it's still taxable. > Interest paid on a 401k mortgage loan SHOULD be deductible > as mortgage interest, even if paid to "yourself". However, > there is some disagreement among professionals, and there > seems no specific guidance from the IRS or from the courts. If not (and it can't be without disqualifying the account) then it's not qualified mortgage interest. - quote - > I don't think CNN is a good source of tax guidance. I'm not
Oh I'm sure about H&R Block. I'll simply refrain from> even sure that H&R Block is a good source of tax guidance. stating what I am sure of about them. -- David M. Woods, EA, ChFC, CLU Woods Financial Services Norwood, MA 02062 www.woods-financial.com << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#9
03-18-2005, 11:07 AM
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| Re: 401k loan tax deduction? "Phil Marti" <prm20871[at]verizon.net> wrote: - quote - > "MPeter" <mpeter[at]nospam.yahoo.com> wrote:
Hey! I resent that! I'll have you know that on occasion,> > Last year my wife and I purchased a home. Part of our > > downpayment came from a 401k loan. > > > I watched a show on CNBC this evening that said that the > > interest on a 401k loan is tax deductible if it is used for > > the downpayment on a home. > Switch to the cartoon network. Evidently you'll get better > tax advice there. It's not deductible Cartoon Network stills airs a cartoon worth watching, like Justice League and Megas XLR. -- David M. Woods, EA, ChFC, CLU Woods Financial Services Norwood, MA 02062 www.woods-financial.com Moderator: And my hero: Rocket J. Squirrel with his partner, the most successfull graduate of WhatsaMatta U., Bullwinkle Moose. BTW: Boris and Nattasa graduated from Duke which means they live in New Jersey. << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#8
03-17-2005, 05:51 AM
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| Re: 401k loan tax deduction? David Woods, EA, ChFC, CLU wrote: - quote - > The person who said this is on CNBC was wrong. Period. If
That part is wrong. There's an increase in the loan> nothing else, interest used to buy your home must be on a > mortgage secured by your residence. Your 401(k) does not > and CAN not have a mortgage on your home. duration duration limit for 401(k) mortgage loans, and the loan must be secured by the house. (I'm not sure what happens if the 401(k) has to foreclose....) << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#7
03-17-2005, 04:16 AM
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| Re: 401k loan tax deduction? Arthur L. Rubin wrote: - quote - > MPeter wrote:
I think you are confused. The exemption for first-time> > Last year my wife and I purchased a home. Part of our > > downpayment came from a 401k loan. > > > I watched a show on CNBC this evening that said that the > > interest on a 401k loan is tax deductible if it is used for > > the downpayment on a home. > I think you may be confusing two different issues. > A disbursement from a 401k is NOT subject to the early > withdrawal penalty if used toward purchase of a "first" home > (and under $10,000), although it's still taxable. homebuyer applies to IRA withdrawals, NOT 401Ks. - quote - > Interest paid on a 401k mortgage loan SHOULD be deductible
I disagree. The loan is secured by funds in the 401K, not> as mortgage interest, even if paid to "yourself". However, > there is some disagreement among professionals, and there > seems no specific guidance from the IRS or from the courts. the house. You can't deduct the interest you pay to yourself, since you never paid tax on the interest income. - quote - > I don't think CNN is a good source of tax guidance. I'm not
I thought the reference was to CNBC, not CNN.> even sure that H&R Block is a good source of tax guidance. << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#6
03-17-2005, 03:19 AM
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| Re: 401k loan tax deduction? "Arthur L. Rubin" <ronnirubin[at]sprintmail.com> wrote: - quote - > I think you may be confusing two different issues.
Not true. While that exception applies to IRA> A disbursement from a 401k is NOT subject to the early > withdrawal penalty if used toward purchase of a "first" home > (and under $10,000), although it's still taxable. distributions, it does not apply to 401(k) distributions. See Publication 575. - quote - > Interest paid on a 401k mortgage loan SHOULD be deductible
I have never seen a 401(k) loan secured by real estate,> as mortgage interest, even if paid to "yourself". which is a requirement for the deduction of mortgage interest. -- Phil Marti Clarksburg, MD << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#5
03-14-2005, 01:48 AM
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| Re: 401k loan tax deduction? "MPeter" <mpeter[at]nospam.yahoo.com> wrote: - quote - > Last year my wife and I purchased a home. Part of our
Please don't believe everything you hear on TV.> downpayment came from a 401k loan. > I watched a show on CNBC this evening that said that the > interest on a 401k loan is tax deductible if it is used for > the downpayment on a home. One of the requirements for the home mortgage interest deduction is that the loan be secured with the home itself as collateral. Therefore, interest on a standard mortgage loan is deductible, interest on a home equity loan is deductible (within limits), and so on. But in most cases, interest on a loan from a friend, a bank, your 401(k), or whatever source that does not feature the property as collateral is not deductible. - quote - > I searched the IRS web site but couldn't find anything on
Sorry, it's not there to find. For more information, look> this. Is this true? If so, which form do I use? Are the > any other rules or income limitations? on the site for Pub 530, Tax Information for First-Time Homeowners, and Pub 936, Home Mortgage Interest Deduction. Bryan -- Bryan Kellar, EA Oregon Tax Help, Inc. -- Portland, Oregon www.oregontaxhelp.com www.canadatax.org << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#4
03-14-2005, 01:48 AM
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| Re: 401k loan tax deduction? MPeter <mpeter[at]nospam.yahoo.com> wrote: - quote - > Last year my wife and I purchased a home. Part of our
No this is not true. You might want to write or email CNBC> downpayment came from a 401k loan. > I watched a show on CNBC this evening that said that the > interest on a 401k loan is tax deductible if it is used for > the downpayment on a home. > I searched the IRS web site but couldn't find anything on > this. Is this true? If so, which form do I use? Are the > any other rules or income limitations? and complain. __ Art Kamlet ArtKamlet [at] AOL.com Columbus OH K2PZH << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#3
03-14-2005, 01:29 AM
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| Re: 401k loan tax deduction? "MPeter" <mpeter[at]nospam.yahoo.com> wrote: - quote - > Last year my wife and I purchased a home. Part of our
Really now. Did they give a citation? No? Didn't think> downpayment came from a 401k loan. > I watched a show on CNBC this evening that said that the > interest on a 401k loan is tax deductible if it is used for > the downpayment on a home. so. - quote - > I searched the IRS web site but couldn't find anything on
The person who said this is on CNBC was wrong. Period. If> this. Is this true? If so, which form do I use? Are the > any other rules or income limitations? nothing else, interest used to buy your home must be on a mortgage secured by your residence. Your 401(k) does not and CAN not have a mortgage on your home. -- David M. Woods, EA, ChFC, CLU Woods Financial Services Norwood, MA 02062 www.woods-financial.com << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#2
03-14-2005, 01:10 AM
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| Re: 401k loan tax deduction? MPeter wrote: - quote - > Last year my wife and I purchased a home. Part of our
It fails every test for being deductible......> downpayment came from a 401k loan. > I watched a show on CNBC this evening that said that the > interest on a 401k loan is tax deductible if it is used for > the downpayment on a home. > I searched the IRS web site but couldn't find anything on > this. Is this true? If so, which form do I use? Are the > any other rules or income limitations? > Thanks in advance. It is being paid to a related party, namely yourself. No one is reporting the interest income. The loan is not secured by the home. It is not investment interest. -- Alan http://taxtopics.net << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#1
03-14-2005, 12:32 AM
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| Re: 401k loan tax deduction? MPeter wrote: - quote - > Last year my wife and I purchased a home. Part of our
I think you may be confusing two different issues.> downpayment came from a 401k loan. > I watched a show on CNBC this evening that said that the > interest on a 401k loan is tax deductible if it is used for > the downpayment on a home. A disbursement from a 401k is NOT subject to the early withdrawal penalty if used toward purchase of a "first" home (and under $10,000), although it's still taxable. Interest paid on a 401k mortgage loan SHOULD be deductible as mortgage interest, even if paid to "yourself". However, there is some disagreement among professionals, and there seems no specific guidance from the IRS or from the courts. I don't think CNN is a good source of tax guidance. I'm not even sure that H&R Block is a good source of tax guidance. << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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03-13-2005, 11:15 PM
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| Re: 401k loan tax deduction? "MPeter" <mpeter[at]nospam.yahoo.com> wrote: - quote - > Last year my wife and I purchased a home. Part of our
Switch to the cartoon network. Evidently you'll get better> downpayment came from a 401k loan. > I watched a show on CNBC this evening that said that the > interest on a 401k loan is tax deductible if it is used for > the downpayment on a home. tax advice there. It's not deductible -- Phil Marti Clarksburg, MD << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#-1
03-12-2005, 01:00 PM
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| 401k loan tax deduction? Last year my wife and I purchased a home. Part of our downpayment came from a 401k loan. I watched a show on CNBC this evening that said that the interest on a 401k loan is tax deductible if it is used for the downpayment on a home. I searched the IRS web site but couldn't find anything on this. Is this true? If so, which form do I use? Are the any other rules or income limitations? Thanks in advance. << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
| Tags |
| 401k, deduction, loan, tax |
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