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Asked 7/28/2010
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If I borrow money from my 401k to purchase a home, is the interest I pay back to my 401k deductible as mortgage interest on my 1040? If I borrow money from my 401k to purchase a home, is the interest I pay back to my 401k deductible as mortgage interest on my 1040? |
Answer 1/4 - Submitted 7/28/2010
Answer 2/4 - Submitted 7/28/2010
No - the loan from a 401k is not deductible as a mortgage interest deduction. The loan is essentially from 'you' and the interest is being paid directly to your 401k account - so if you were allowed to claim this as an interest deduction then you'd also have to pay taxes on the interest earned!
Answer 4/4 - Submitted 11/17/2010
Since the loan from the 401(k) is not a lien against the building, it is not deductible as mortgage or investment interest.
Per the IRS, "Home Acquisition Debt is any loan whose purpose is to acquire, to construct, or to substantially improve a qualified home. It also must be secured by that home."
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