Discussion:Investment Interest Deduction Questions
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Discussion Forum Index --> Consumer Questions --> Investment Interest Deduction Questions
| 1 February 2007 | |
| 1. If I take out a cash advance on a credit card as a loan to use for buying stock, can I deduct the interest paid as an investment interest expense?
2. Is any fee associated with the cash advance deductible as an investment fee? 3. What if I don't take a cash advance, but simply load up my credit cards with charges, and instead of paying them off, use the money to invest in stocks? Can the interest on the credit cards be claimed as investment interest? 4. What if I have 20,000 that I could use to pay of credit cards, but am instead using it to invest in stocks. If I have 30,000 of credit card debt that is accruing interest, can I say that 2/3 of that interest is an investment interest expense? If only 15,000 of the credit cards are currently charging interest can I claim all of that as investment interest and claim the other 15,000 is simply not being used for investing? | |
| 1 February 2007 | |
| I think you are looking for trouble. Only item 1. MAY qualify for investment interest expense. No way 3 or 4 would qualify. Not sure about 2. I don't even think the idea of loading up cc for stock is good idea. Pay the debt off then consider investing in stock. | |
| 1 February 2007 | |
| What if I get a new credit card, and transfer a balance to it from an existing card with a zero balance, effectively giving my existing card a negative balance of say, -$10,000. Then I request a refund check from the credit card company for the balance difference. Then I get the 10,000 and deposit it in my stock account and use the money for investing in stocks. Would any interest paid on the balance transfer be able to be claimed as investment interest, since the whole reason for doing this scenario was to get money to invest with? (this is what I have actually done by the way) | |
| 1 February 2007 | |
| I take it "banana ball" means: no don't even try to do that? | |
| 1 February 2007 | |
| I'd be tempted to say it sounds like bank fraud, except that I can't really follow it. In any event investment interest is only deductible to the extent of investment income. | |
| February 1, 2007 | |
| See Publication 550. Interest paid for amounts borrowed to buy stocks is deductible as investment expenses against investment income. This would include credit card interest. | |
| 1 February 2007 | |
| My margin account charged me $189 in interest, so I am deducting that. But I made $1500 in investment income, so if I can apply some of the interest I am paying on credit cards (funds which I am using for the explicit purpose of investing) to get closer to the $1500 number, and it is legal and ethical, then I would want to do that.
I will read up on section 163. Thanks Scot1. | |
| 1 February 2007 | |
| do you own a house? if you do you can do something easier. Take a home equity loan and use the monies to pay credit card debt and still deduct the interest on the home equity loan.
By doing the home equity loan you are converting nondeductible interest to deductible interest. | |
| 1 February 2007 | |
| I don't own a home unfortunately (I'll never be able to afford a house in Los Angeles I fear). Thanks for the suggestion however. The reason I did the credit card thing is because I was able to get 12 months no interest on balance transfers, and with no balance transfer fee. Essentially a 12 month interest free loan, so I figured why not (aside from my credit being impacted somewhat which isn't a concern for me currently). However I do have some credit cards that do accrue interest, and in my mind I am using that money for the investments, because otherwise I would simply pay off those credit cards with the investment funds.
I think what I am unclear on here is what is the legal basis for justifying such a deduction, and having multiple credit cards, can I pick and choose which ones I am "using" for investment purposes (i.e. the ones with the highest interest rate)? | |
| 16 March 2008 | |
| I lost a lot of money in the stock market so I would advice people not to follow NHOUCK 's strategy. But to me it is a very important question which needs be answered???? So I think we should continue this discussion. I wonder if anyone has actually done this and the IRS has accepted his or her chamges.
R | |
| 16 March 2008 | |
| I lost a lot of money in the stock market so I would advice people not to follow NHOUCK 's strategy. But to me it is a very important question which needs be answered???? So I think we should continue this discussion. I wonder if anyone has actually done this and the IRS has accepted his or her chamges.
R | |
