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Mark Taylor
Mark Taylor, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 725
Experience:  Certified Public Accountant
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I recently established a solo 401k and want to take a loan

Customer Question

I recently established a solo 401k and want to take a loan out. I want to pay off a mortgage on my principle residence which my brother and I are both on (He co signed original loan application and closing docs). 50 k will come from solo 401k loan plus 23 k will come from personal savings and checking accounts from other sources to payoff the Mortgage/Bank My brother has agreed to sign off the deed only after I pay off the mortgage and receive the discharge documents. My question. Can I amortize this loan from my solo 401k OVER 15 YEARS rather than the normal FIVE? In other words, for tax purposes, WILL THE IRS CONSIDER this transaction as a PURCHASE on a PRIMARY RESIDENCE? I know that I consider it a purchase on my primary residence, as I am currently living in the property. 15 year payback would work far better for me than the 5.
Submitted: 3 months ago.
Category: Tax
Expert:  Mark Taylor replied 3 months ago.

Unfortunately from your description it sounds like you would be stuck with 5 years. The is an exception for a longer payback period if you are purchasing your primary residence. The problem that I see is that you already own your personal residence. Would obtaining a mortgage in your name be an option. This would give you the option for a 15 year payback and a tax deduction (which may or may not be beneficial for you). If you itemize you would benefit from the mortgage interest and property taxes.

I hope this helps. Please let me know if you have any other questions or need clarification.