I used a low APR cash advance to invest in a stock.
Everybody knows using a credit card at the ATM or bank will qualify the transaction as a cash advance and cash advances carry a rather ...
Everybody knows using a credit card at the ATM or bank will qualify the transaction as a cash advance and cash advances carry a rather ...
And using the money to buy stocks. Generally, these cash advance offers I have been receiving are for 6 months, but I might be able ...
Get a CC with intro 0% $10,000 credit limit, 12 months Get a CD yielding 5% monthly 7 month (TD) Would you get charged by ...
Nearly every one of us has been through a time in our lives when our financial situation did not balance out. Even if you make ...
Posted in cash advance payday loan - February 4th, 2010.
Tags: advance, APR, card, cash, Cash Advance, Credit, deductible, interest, investmentment, is interest paid on a credit line tax deductible if not tied to your mortage, is intrest on cash advanes tax deductable, paid, stock, when did credit card interest become non tax deductible?, when did credit card interst become non deductible
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4 de February, 2010 at 8:10 pm
No, that would not be deductible. You must take out a loan for the express purpose of purchasing an investment. The deduction is primarily intended for margin accounts but a loan that pledges the investment as security would be deductible. A credit card cash advance would not be deductible since it cannot be tied to the investment.
4 de February, 2010 at 8:11 pm
According to the interest tracing rules, this interest is deductible as investment interest. This is assuming that you literally used the proceeds of the cash advance to purchase the stock. There is no requirement that investment interest be secured by the investment. (Qualified home mortgage interest must be secured by the home, but that is a different animal.)
Assuming that your credit card debt does NOT get paid off, you will need to keep track of the stock you purchased with the loan. If you sell the stock and do not use the proceeds to purchase another investment, the credit card debt will become nondeductible personal interest from that point forward.
Investment interest paid is only deductible to the extent that you have investment income during the year. The portion that is not deducted gets carried forward to following years. The portion that is deductible gets carried to Schedule A, Itemized Deductions, and is limited by those rules.
The link below is to Form 4952, Investment Interest Expense Deduction.
Incidentally, margin interest is NOT automatically deductible as investment interest. If, for example, you use a margin loan in your brokerage account to purchase a cruise, that interest is personal, nondeductible interest.