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Level 2
December 9, 2022
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Margin loan for rental property

  • December 9, 2022
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If I borrow on margin from my stock account and pay for the purchase of a rental property. Is the margin interest deductible as rental property expense?

Best answer by Mike9241

In general, interest expense on a debt is allocated in the same manner as the debt to which such interest expense relates is allocated. Debt is allocated by tracing disbursements of the debt proceeds to specific expenditures. This section prescribes rules for tracing debt proceeds to specific expenditures. (Reg Section 1.163-8T(a)(3))­

2 replies

Mike9241Level 15Answer
Level 15
December 9, 2022

In general, interest expense on a debt is allocated in the same manner as the debt to which such interest expense relates is allocated. Debt is allocated by tracing disbursements of the debt proceeds to specific expenditures. This section prescribes rules for tracing debt proceeds to specific expenditures. (Reg Section 1.163-8T(a)(3))­

Level 15
December 9, 2022

@Vic14 - yes, but only on Schedule E....if you later sell the property but do not pay off the debt, then no.