My interest <f8egc5$ap$1[at]panix2.panix.com> wrote:
- quote -

I don't think so.

As a starting point, if you need to borrow, find the
lowest rate.

--
ArtKamlet at a o l dot c o m Columbus OH K2PZH

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My interest <myinter...[at]gmail.com> wrote:
- quote -

No. Both home equity and investment interest are deducted on
Schedule A, so have an equal effect on your taxable income
if the interest rates are equal. Obviously, the loan with
the LOWER interest rate will result in a greater after-tax
profit, regardless of your marginal tax rate.

If loss of the entire home equity loan amount (plus
interest) would not cause you to lose your home, then that
would be the preferred way to go.

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"My interest" <myinterest[at]gmail.com> wrote:

- quote -

No. Both investment interest and home equity interest are
Schedule A deductions.

--
Phil Marti
Clarksburg, MD

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kam...[at]panix.com (Arthur Kamlet) wrote:
- quote -

So assuming both are not reach their respective limits, can
I conclude that the investment interest is more attractive
in a typical situation (e.g. investment interest rate is 10%
and home equity is 7.25%)? For example, for simplicity,
assuming one makes 5K profit and borrowning 10K.

1) using investment margin, the interest is 1K and the net
taxable amount is 4K

2) using home equity, the interest is 0.725K, but one can
only deduct, say, up to 35% of that amount, depending on his
individual tax rate.

Is my understanding correct?

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Ira Smilovitz <iras1[at]aol.com> wrote:
- quote -

Both investment interest and home equity interest are
deductible on Schdule A, but with different limits,

Investment interest is limited to investment income.

Home equity interest is limited to $100,000 principal
on the main home or one second home.

Home equity interest is not deductible for AMTI, so may
throw you into AMT.

Traceability may apply to investment interest.

--

ArtKamlet at a o l dot c o m Columbus OH K2PZH

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"My interest" <myinterest[at]gmail.com> wrote:

- quote -

Forget the tax/cost perspective and look at the risk
perspective. If you are a lousy stock picker would you
rather lose your investment or your house? For what it's
worth, margin interest is deductible as an itemized
deduction to the extent you have investment income. Except
in some less common circumstances, it doesn't affect your
investment gain.

Ira Smilovitz

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f I need to borrow money to invest in stock market, what's
more attractive from the tax/cost perspective between using
home equity and margin borrowing offered by the broker?

I think the home equity interest might be (partially) tax
deductable. The margin interest may be counted as investment
cost. But I don't know how the investment cost is treated.
Is it fully deducted from your investment gain or what?

THanks.

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