Investment interest is a strange animal compared to other interest payments. Most interest is deductible or not deductible; investment interest is deductible sometimes. If you have investment income (interest and dividend income, capital gains if you elect to treat as investment income), you can take investment interest as an itemized deduction up to the amount of your investment income; the rest will be carried over until there is investment income to offset it.Here is an article by Kay Bell in LoanShoppers.net about investment interest:http://www.loanshoppers.net/how_to_deduct_interest.htmIf you have any questions, call me at 818-317-6035 or email me at bstonercpa@sbcglobal.net and I will try to answer them.Tomorrow we can talk about business interest.You can count on us to count for you!
Brian’s Tax Musings
Today you will hear about points and PMI (kinda catchy, isn’t it?) Points are loan origination fees that are a percentage of your loan and can be fully deductible on the purchase of your primary residence or a second vacation home in the year of purchase. Certain requirements have to be met. Points on a refinance are deductible over the life of the new loan. Here is an article by The Mortgage Professor about points:http://www.mtgprofessor.com/A%20-%20Points/are_points_deductible.htmPMI stands for Private Mortgage Insurance and is a requirement on a loan if the taxpayer put less than 20% down on a purchase of a house or has less than 20% equity in a house in a refinance. PMI can be deductible but there are limitations of income. Here is an article by Kay Bell at Bankrate.com:http://www.bankrate.com/finance/taxes/deducting-private-mortgage-insurance.aspxAs usual, if you have any questions, call me at 818-317-6035 or email me at bstonercpa@sbcglobal.net and I will try to answer them.The next three blogs will talk about investment, business and rental interest.You can count on us to count for you!
Brian’s Tax Musings
If you have a mortgage, you probably have a mortgage interest deduction. Your deduction is based on your aquisition indebtedness (the amount you borrowed when you originally bought the house less payments made). This could be different from your actual loan if you refinanced and took money out of the house. You are entitled to deduct interest on the first $1,000,000 of aquisition indebtedness, which must be invested in the house, and the first $100,000 of home equity indebtedness, which can be used for any purpose (buy a car, TV, whatever). Here are two articles on aquisition indebtedness and home equity indebtedness from Mortgage Guide 101 to read (especially if you want your head to explode):http://www.mortgageguide101.com/acquisition-indebtedness.aspxhttp://www.mortgageguide101.com/equity-indebtedness.aspxI was going to talk about points next, but I need a day to recover from this, so I will talk about them tomorrow. Call me with questions at 818-317-6035 or email me at bstonercpa@sbcglobal.net and I will try to answer them.You can count on us to count for you!