betheeg Posted March 31, 2004 Posted March 31, 2004 is the interest a participant pays back on a loan deductible on tax return?
FundeK Posted March 31, 2004 Posted March 31, 2004 Generally, No. I do believe that if the participant's home is used as collateral (which doesn't occur very often) then the interest on those loan payments could be deductible. Someone correct me if I am wrong.
Earl Posted April 1, 2004 Posted April 1, 2004 If its not a Key Employee and not 401(k) money and secured by the house. CBW
Harwood Posted April 1, 2004 Posted April 1, 2004 What if the proceeds of the loan are used for a deductible business expense?
Earl Posted April 1, 2004 Posted April 1, 2004 I would assume that the biz could take the deduction for that expense. That doesn't relate to the interest paid by the participant to the plan. CBW
Harwood Posted April 1, 2004 Posted April 1, 2004 If the loan proceeds were used to buy "Investment Property," would that interest be deductible on line 13 of Schedule A of Form 1040?
FundeK Posted April 1, 2004 Posted April 1, 2004 It doesn't matter what the loan proceeds are used for, it matters what is used to secure the loan. If your home is used as collateral, the interest can be deductible. That is the only instance that I know of which would allow the interest payments on a loan from your retirement plan to be deductible.
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