6 ms·
We allow people to save for college in tax advantaged plans. Why not houses? And if so, why not use a vehicle that already exists (401k/IRA) instead of creating
by ethbr0 4y ago
We allow people to save for college in tax advantaged plans. Why not houses? And if so, why not use a vehicle that already exists (401k/IRA) instead of creating a whole new one?
The conventional wisdom that borrowing from your 401k to buy a house is always a poor move seems... overly reductive and a bit patronizing.
If someone isn't able to fund their 401k and save for a down payment, who am I to tell them that using a tax advantaged vehicle is a bad way to become a homeowner?
Mortgage rates, local rental prices, local home prices and inventory, living situation and likelihood of moving, tax situation, etc. all impact, and I don't know anyone's situation.
Besides, who wants all the money in the world if you have to spend most of your life living in a place you hate?
- frumper 4y agoI mean, I'd love to save for a home with a tax advantaged account. That sounds so good that if I ever planned on moving I'd want to max out my contributions to that, sell my house, take the money I earn from that house and dump it in my Roth 401k since I won't pay taxes on most of the capital gains, then take the distribution from the home savings account and put it towards the next down payment on a house and avoid taxes there too. As for why we don't allow you to do that from a 401k, for the same reason we have separate accounts for the education savings. 401k is designed to incentive retirement, not education or housing. Society could decide to make 401k's more broad, but I suspect that would just lead to the more well off people being able to better use them as tax shelters. Mortgages are already subsidized in other ways, including government down payment assistance, or low down payment requirements for loans.