@jeeptjrcon - There is no direct tax benefit by purchasing a home. If you can itemize then you "might" be able to deduct any mortgage interest and property tax paid, but that is true reguardless of where the money came from to purchase the home and has no direct relationship to a taxable 401(k) distribution and the early distribution penalty.
If all the purchase money came for the 401(k) and there was no mortgage then nothing other than any property tax paid would be an itemized deduction, so the taxpayer probably would not be able to itemize and could not deduct anything at all.
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
