Business Tax Recovery Logo


Tax Deduction Consulting: Margin Loan Interest Gorham ME

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.

Michael John DellOlio (RFC®), JD, MBA
(207) 294-0401
16 Middle Street
Saco, ME
Company
Michael J. DellOlio & Associates, L.L.C.
Qualifications
Education: B.S.,MBA,J.D.,NASD Series 6,7,24,63,65; Maine Insurance License
Years of Experience: 24
Membership
IARFC
Services
Invoice, Estate Planning, Business Planning, Portfolio Management, Trustee Service, Pension Planning, Retirement Planning, Tax Planning, Tax Returns, Employee Benefits, Stocks and Bonds, Mutual Funds, CD Banking, Annuities, Life Insurance, Disability Income Insurance, Long Term Care Insurance, Medical Insurance, BuySell, Compensation Plans

Data Provided by:
Johnson Virginia M
(207) 772-2322
686 Brighton Ave
Portland, ME
 
H & R Block
(207) 773-0221
252 Saint John St
Portland, ME
 
H & R Block
(207) 775-1972
400 Maine Mall Rd
Portland, ME
 
David Thomas & Assoc
(207) 871-0123
477 Congress St Ste 1005
Portland, ME
 
Liberty Tax Service
(207) 828-4829
694 Forest Ave
Portland, ME
 
Scott Associates
(207) 772-0441
12 Revere St
Portland, ME
 
Austin Associates PA CPA
(207) 892-6642
183 Us Route 1
Portland, ME
 
Jackson Hewitt
(207) 899-1540
34 Atlantic Pl
Portland, ME
 
Brown Barry J
(207) 879-7000
22 Free St Ste 301
Portland, ME
 
Data Provided by:

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...

Click here to read the rest of this article from BusinessTaxRecovery.com