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Posted by Arthur Kamlet on July 28, 2007, 12:23 am
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>> f I need to borrow money to invest in stock market, what's
>> more attractive from the tax/cost perspective between using
>> home equity and margin borrowing offered by the broker?
>>
>> I think the home equity interest might be (partially) tax
>> deductable. The margin interest may be counted as investment
>> cost. But I don't know how the investment cost is treated.
>> Is it fully deducted from your investment gain or what?
> Forget the tax/cost perspective and look at the risk
> perspective. If you are a lousy stock picker would you
> rather lose your investment or your house? For what it's
> worth, margin interest is deductible as an itemized
> deduction to the extent you have investment income. Except
> in some less common circumstances, it doesn't affect your
> investment gain.
Both investment interest and home equity interest are
deductible on Schdule A, but with different limits,
Investment interest is limited to investment income.
Home equity interest is limited to $100,000 principal
on the main home or one second home.
Home equity interest is not deductible for AMTI, so may
throw you into AMT.
Traceability may apply to investment interest.
--
ArtKamlet at a o l dot c o m Columbus OH K2PZH
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