Investment Interest Expense

DEFINITION of 'Investment Interest Expense'

Any amount of interest that is paid on loan proceeds used to purchase investments or securities. Investment interest expense includes margin interest used to leverage securities in a brokerage account and interest on a loan used to buy property held for investment. Investment interest expense is deductible within certain limitations.

BREAKING DOWN 'Investment Interest Expense'

Your investment interest expense deductible is limited to the amount of investment income received, such as dividends and interest. If an investment is held for both business and personal gain, then any income received must be allocated proportionately between them. Personal investment interest expense is reported on Schedule A of the 1040.

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