When is a margin loan deductible?

January 18, 2002

From:  Deever
Date:  Wed, 26 Dec 2001

To close on the purchase of our new home before selling our existing home, we obtained the cash for closing by taking a margin loan from our broker against our stock assets, then repaid the loan a few months later after our existing house sold. Is the margin interest from this loan deductible like our mortgage interest? If so, how do we report it?

Answer

Date:  26 Dec 2001

Hello Deever,

I’m sorry, but in order to be tax deductible, the home acquisition mortgage must be secured by a principal residence or a second residence. The interest for your margin loan is non-deductible personal interest.

Good luck!
Mike Gray

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