Interest Deduction Is Limited To Net Investment Income
Your investment interest deduction is limited to your net investment income. Net investment income is generally taxable interest, non-qualified dividends and net short term capital gains, reduced by other investment expenses, if any.
Can Be Carried Forward Indefinitely
Any disallowed interst is carried forward, and you can deduct it in a later year if you have excess net investment income
Election Concerning Long Term Capital Gain Or Qualified Dividend Income
You may elect to treat long term capital gains or qualified dividends as investment income in order to deduct more or your investment income. TRADEOFF: If you do this, that portion of the long term gain or dividend is taxed at ordinary income rates.
Interest On Debt Used To Purchase Tax Exempt Bonds
Interest on such loans are not deductible.
Passive Loss Rules
Interest incurred to fund passive activities becomes part of the overall passive activity income or loss and subject to the passive loss rules.
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