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Tax Deduction Consulting: Margin Loan Interest Brigham City UT

Is the interest paid on the margin loan deductible as investment interest? Ultimately, the answer is going to lay in the use of the loan funds. The IRS allows interest as a deduction when the loan proceeds are used for the purpose of income producing investments.

Mr. A. Wayne Margetts (RFC®), LUTCF
(801) 532-1871
175 S Main St, Ste 1050
Salt Lake City, UT
Company
LPL
Qualifications
Education: BSc (Math)MBA
Years of Experience: 16
Membership
IARFC, MDRT, NAIFA
Services
Invoice, Estate Planning, Business Planning, Portfolio Management, Pension Planning, Executive Compensation Planning, Retirement Planning, Medicaid Planning, Tax Planning, Seminars Work, Employee Benefits, Stocks and Bonds, Mutual Funds, CD Banking, Annuities, Life Insurance, Long Term Care Insurance, Group Insurance, Charitable Planning, Education Plan, Charitable Foundations, Asset Protection, BuySell, Compensation Plans

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Lunt Gary
(435) 656-1232
435 E Tabernacle St Ste 105
St George, UT

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H&R Block
(801) 546-3091
27 S FORT LN
LAYTON, UT

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MainStreet Tax & Accounting Services
(435) 789-0691
1285 W. Hwy 40
Vernal, UT
 
H&R Block
(801) 334-4002
5845 E AVE BLDG 412
HILL AFB, UT

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Mr. Gregory W. Williams (RFC®), CFP, CHFC, CLU, LUTCF, MSFS
(801) 453-2271
6340 South 3000 East, Suite 500
Salt Lake City, UT
Company
Exit Strategy Specialists, LLC
Qualifications
Years of Experience: 26
Membership
IARFC, MDRT, FPA
Services
Invoice, Estate Planning, Business Planning, Portfolio Management, Trustee Service, Pension Planning, Executive Compensation Planning, personal Coach, Retirement Planning, Tax Planning, Seminars Work, Employee Benefits, Stocks and Bonds, Mutual Funds, Mortgage Loans, Annuities, Life Insurance, Disability Income Insurance, Long Term Care Insurance, Medical Insurance, Group Insurance, Business Coach, Charitable Planning, Education Plan, Asset Protection, BuySell, Compensation Plans

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H&R Block Inside Sears Downtown
(801) 532-0610
754 S STATE ST
SALT LAKE CITY, UT

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H&R Block
(801) 733-0847
3438 BENGAL BLVD
SALT LAKE CITY, UT

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Robert Blake Accounting and Tax
(801) 763-8295
9626 Dorchester Drive
Cedar Hills, UT
 
H&R Block
(801) 255-3231
7065 S STATE ST
MIDVALE, UT

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Tax Deduction Consulting: Margin Loan Interest

Margin Loan Interest Deduction

One area of confusion in the area of tax deductions comes from interest. Is there a margin loan interest deduction? How does a margin loan fit into the overall interest deduction situation?

A margin loan is a loan taken out mainly for the purposes of investment. It uses stocks and other investment securities as collateral. The main benefit of a margin loan is that it allows you to keep your investments intact while at the same time using them to provide additional funds for investment. There are some drawbacks to margin loans as well as the potential for good. Like all investments, there is risk that is almost always directly connected to the potential rate of return. However, is there a margin loan interest deduction?

Is the interest paid on the margin loan deductible as investment interest? Ultimately, the answer is going to lay in the use of the loan funds. The IRS allows interest as a deduction when the loan proceeds are used for the purpose of income producing investments. If the loan is for personal purposes, the interest is not deductible. Since the purpose of the margin loan, by definition almost, is to provide investment capital, any interest will be deductible.

Of course, you must make sure that the loan proceeds are used for income generating investments. If you take the proceeds from the loan and deposit it in a savings account until the time you are ready to make the investment, this is not considered a personal purpose. Since the funds are basically on hold until being invested, the interest on them might still be considered investment interest.

The amount of investment interest that you are allowed to deduct, including margin loan interest, can not exceed the total amount of your investment income in any given year. If you pay more investment interest than you have investment income, you can carry over the excess to subsequent years. The investment interest is calculated on IRS Form 4952, the Investment Int...

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