The Investment Interest Expense Deduction enables taxpayers to deduct interest paid on loans used to purchase investment property, including stocks, bonds, or securities. This deduction is claimed using Form 4952.
Examples of Deductible Investment Interest:
- Interest paid on margin accounts used to buy securities
- Interest on loans used to purchase stocks or bonds
- Interest on loans used in a joint investment venture, not related to a trade or business
Deduction Limits:
- The deduction is limited to your net investment income for the year.
- Any excess investment interest expense can be carried forward to future years.