The National Directory of Certified Public Accountants

Ask A CPA - Interest - Itemized Deduction

Margin Interest

The amount may be either fully, partially, or non-deductible. The margin account investment interest expense is limited to the amount of net investment income, plus any elected amount of net capital gains from the sale of investment property such as stocks or mutual funds. Generally, investment income is gross income from property held for investment, such as interest, ordinary dividends, royalties, or annuities. Limited investment interest in excess of investment income not deducted in the current year may be carried over to future years. It is not lost. The deductible amount is figured on IRS Form 4952. Speak to your local CPA for the deductibility and possible elected amount of the net capital gain from investment property.

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