THE INVESTMENT INTEREST EXPENSE DEDUCTION: LESS BENEFICIAL THAN YOU MIGHT THINK


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The investment interest expense deduction may be less beneficial than you thought. Interest on debt used to buy assets held for investment, such as margin debt used to buy securities, generally is deductible for both regular tax and alternative minimum tax purposes. But interest you incurred to produce tax-exempt income, such as from municipal bonds, isn’t deductible. Also, the deduction is generally limited to your taxable interest income, nonqualified dividends and net short-term capital gains for the year. Contact us to learn how you might boost this break.

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