Is interest charged on debit balance deductible as investment interest expense? The debit balance was in my investment account; I had more than enough interest income.

[CarolC]

It depends.  If the investments generate taxable income, then yes, the margin interest you paid in your brokerage account is an allowable miscellaneous itemized deduction (for the amount above 2% of your AGI), which is taken on Schedule A.

If the debit balance is used to purchase investments that generate tax-exempt income, then no, you cannot deduct the margin interest charged.