If you cannot fully utilize it in a given year it can be carried over to the next.
This is sort of interesting. I have NEVER used margin interest expense on my taxes. It has never been a large amount for me, and I've never itemized deductions.
But it sounds like I can go back through 18 or whatever years of annual brokerage statements, add up all the 18 years of margin interest, and then use them for the 2015 tax year? If they carry over, that's acceptable, right? Although it's never been a big number and is often zero, if I add up 18 year worth I might have $15,000 of margin interest lying unused around in that period.
For the property, we're hoping to buy something here in the Philippines, and there aren't really normal 30 year mortgages for all I know. Even if you can get a 7 year home loan the rate would be nuts, I'll bet it's over 10%. Mortgages are not very well established here - property is generally a cash business, or the developer has a finance arm that lends to you for new properties. I'm planning to just pay for it by taking $300k out of the brokerage account, and That will just increase my current margin borrowing. I own lots of high yield stuff for income, so the theory is the high yield stuff will over time pay off the loan, and on the meantime I'll just pay 1.5% on the amount of outstanding margin borrowing.
It's good to learn that that amount can be deducted, I had convinced myself margin wasn't deductible. Probably each time I looked into it previously my margin interest for the full year was something like $500, so it didn't make sense to itemize just for that - the standard deduction had always been larger than the benefit of the margin interest deduction.
Even this year, we'll see. If we buy this property my margin loan will be about $600,000. At 1.5% interest, that's still only $9,000. I have a wife and three kids, so the standard deduction gives me about $17,000 in deductions, not exactly sure but its a fairly big deduction. Even with a $600,000 margin loan it may not make sense to itemize. I guess that's good because it is because the margin rate is so low. |
