Investment Interest Expense: Still Deductible Post-Tcja?

The Tax Cuts and Jobs Act (TCJA) reduced or eliminated many deductions for individuals. However, one itemized deduction that was kept intact is for investment interest expense. This is interest on debt used to buy assets held for investment, such as margin debt used to buy securities. While investment interest expense is still deductible, it doesn't necessarily mean that you will benefit from the deduction.

Investment interest expense is still deductible

The Tax Cuts and Jobs Act (TCJA) reduced or eliminated many deductions for individuals. However, one itemized deduction that was kept intact is for investment interest expense. This is interest on debt used to buy assets held for investment, such as margin debt used to buy securities.

But just because you have investment interest expense, doesn't mean you will necessarily benefit from the deduction. There are a few hurdles you must pass to benefit from the investment interest deduction. For example, you must itemize deductions. In the past, this might not have been a hurdle because many taxpayers typically had enough itemized deductions to easily exceed the standard deduction. However, the TCJA nearly doubled the standard deduction to $24,000 for married couples filing jointly, $18,000 for heads of households and $12,000 for singles and married couples filing separately for 2018.

The Tax Cuts and Jobs Act (TCJA) reduced or eliminated many individual deductions

Even if you have investment interest expense, you can't count on benefiting from the deduction. There are a few hurdles you must pass to benefit from the investment interest deduction. You must itemise deductions. In the past, this might not have been a hurdle because you may have typically had enough itemised deductions to easily exceed the standard deduction. However, the TCJA nearly doubled the standard deduction, to $24,000 for married couples filing jointly, $18,000 for heads of households, and $12,000 for singles and married couples filing separately for 2018.

Investment interest expense is interest on debt used to buy assets held for investment

However, just because you have investment interest expense, it doesn't mean you will necessarily benefit from the deduction. There are a few hurdles you must pass to benefit from the investment interest deduction. You must itemise deductions. In the past, this might not have been a hurdle, because many taxpayers typically had enough itemised deductions to easily exceed the standard deduction. However, the TCJA nearly doubled the standard deduction, to $24,000 (married couples filing jointly), $18,000 (heads of households) and $12,000 (singles and married couples filing separately) for 2018.

You must itemize deductions to benefit from the investment interest deduction

The Tax Cuts and Jobs Act (TCJA) reduced or eliminated many deductions for individuals. However, one itemized deduction that the TCJA kept intact is for investment interest expense. This is interest on debt used to buy assets held for investment, such as margin debt used to buy securities.

Even if you have investment interest expense, you can't count on benefiting from the deduction. There are a few hurdles you must pass to benefit from the investment interest deduction. You must itemise deductions. In the past, this might not have been a problem, as many taxpayers typically had enough itemised deductions to easily exceed the standard deduction. However, the TCJA nearly doubled the standard deduction, to $24,000 (married couples filing jointly), $18,000 (heads of households) and $12,000 (singles and married couples filing separately) for 2018.

The TCJA nearly doubled the standard deduction for 2018

The Tax Cuts and Jobs Act (TCJA) reduced or eliminated many deductions for individuals. However, one itemized deduction that was kept intact is for investment interest expense. This is interest on debt used to buy assets held for investment, such as margin debt used to buy securities.

Despite the deduction for investment interest expense being kept intact, this doesn't mean that individuals will necessarily benefit from it. There are a few hurdles that must be passed to benefit from the investment interest deduction. Firstly, you must itemize deductions. In the past, this might not have been a significant hurdle because many taxpayers typically had enough itemized deductions to easily exceed the standard deduction. However, with the TCJA nearly doubling the standard deduction, it may now be more challenging to exceed this threshold.

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