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Oh Kaye Kotts Winner! Winner! Winner! Paying Yourself? Flat in New York City CONDOlences Caring for My Wife   The Non-Taxpaying Class   No Accounting for Golf   E-Mail  This Page To A Friend Your email: Your name: TO email:

Paying Yourself? » From: Chicago, IL Dear TaxMama: Is interest on a 401K loan used for a home purchase deductible even though your are basically paying yourself the interest? Tony Hi Tony, Yes. Just make sure the money goes directly to escrow. Don't mix it with other funds .... or if IRS does a tracing and other checks cleared first ... don't ask. OR, you can have them secure the loan against your home, so it will be an actual mortgage. (I remember that option when we bought our home using 401k money.) Don't worry about the paying yourself part. When you take all this money back out of your 401(k), it will all be taxed. But, if you don't make the payments? WORRY. Because then you'll have to pay the tax as though it had been a premature withrawal. Enjoy your home. Best wishes, Eva Rosenberg Your TaxMama

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