Thread: Invenstment tax deductions.

Probably stupid question(s)...

My company does not offer investment plans so I assume anything I do on my own I have to use my post tax income. My plan is to put maybe $500 or $600 a month into this thing.

I have read that I can use this as a tax deduction?

I wouldn't mind using it as a joint home purchase/retirement plan, would it be better to just do a general savings plan so I don't incur the penalty when using part of it for home down payment? Of course this means I can't use it as a deduction.

Could I use the down payment down the road as a tax deduction since it is towards a home purchase if I keep it in a savings for now, and likewise use whatever other money is in the account at that time as a tax deduction when I would move it into a actual retirement plan?

Thanks for any advice.

I think you're missing some information here in your post.

But the short answer is to visit with your CPA. There's a lot of options for you.

There is probably a great deal missing from my post, I just don't have the knowledge to tell you what those missing things are lol

This is the first time I have been in position to really consider house or investments, so don't have the CPA yet

Guess it is time to look towards that.

From my experience the only time post tax investments come into play is when you sell an investment. Then you need to look at short term or long term rates as far as how it is taxed.

You can also look into placing your money in a Roth Ira for some sort of tax shelter.

I had a major investment go bad a few years back, so I get to claim a $3000 loss each year for about 5 to 6 more years.

Oh and up until April 15th you can still contribute to a Roth Ira and have it count on last year's taxes.

I'm sure there is more. That was just my experience.

Some investments (like 401Ks and IRAs) withhold taxes until some future time. Most do not. It sounds like you have two goals in mind and they are likely to be better off keeping separate.

However, I was able to take a loan out against my 401K to pay off some debts and it does not make the money taxable because I am essntially borrowing from myself. The downside to this is you have to set up a payment plan like any loan that pays back your 401K gradually and you are not able to earn any interest on your 401K over the time you pay off your loan. So, in theory, you could establish a 401K, use part of it as a loan years later for the down payment on the house, and then pay back the loan to yourself gradually - interest free.

However, you would be smarter (assuming a steady job and a good income), to take out a home loan because the rates there with good credit are often better than you'd get with a loan - plus you improve your credit score as you pay it off.