☰
✕
Sign In

Why sign in to the Community?

  • Submit a question
  • Check your notifications
Sign in to the Community or Sign in to TurboTax and start working on your taxes
Returning Member
posted Jul 15, 2021 11:41:06 AM

401K and house improvements

Is there any tax relief if you are retired and withdrawal from your 401K to do an upgrade/repair for your house? 

0 2 551
2 Replies
Level 15
Jul 15, 2021 12:18:27 PM

No.  Withdrawals from pre-tax retirement plans are always subject to regular income tax.  If you are younger than 59-1/2, they are also subject to a 10% penalty for early withdrawal.  There are some tax provisions that provide relief from the 10% penalty.  But there are no provisions that provide relief from the income tax. 

Employee Tax Expert
Jul 15, 2021 12:21:07 PM

Hi Shawn,

Unfortunately there is no relief for withdrawing funds from your 401k for use in upgrading your personal residence.

 

You do however, get to increase the cost basis of your home by the value of the upgrades, so that  you can reduce the gain on your home if/when you sell.