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

For answers to new questions, subscribe to our newsletter, Michael Gray, CPA's Tax & Business Insight by filling out the form below.

IRS Circular 230 Disclosure: As required by U.S. Treasury Regulations, you are hereby advised that any written tax advice contained on this website was not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed under the U.S. Internal Revenue Code.