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Investment Interest Expenses

Investment interest expense is the interest paid on loans used to purchase property you hold for investment. The amount of investment interest expense you can deduct is limited to your net investment income. 

Go to this section in Credit Karma Tax: Investment Interest

You cannot deduct interest you incurred to produce tax-exempt income.

Qualified investment interest expenses may also include interest on margin accounts to buy taxable securities

Qualified investment interest expenses don’t include things like:

  • Interest paid on money borrowed for personal use, such as:
    • Credit cards
    • Cars
    • Jewelry
  • Investments from passive activities
  • Interest from qualified mortgage bonds

As a result of the Tax Cuts and Jobs Act of 2017 (2017 tax reform): Miscellaneous expenses are no longer deductible. This includes investment-related expenses such as fees for investment advice.
Source: irs.gov

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