Comments on: Can personal loan interest be tax deductible if you use the loan to buy property? http://www.personal--loans-blog.com/united-states/can-personal-loan-interest-be-tax-deductible-if-you-use-the-loan-to-buy-property The best deals and information on Personal Loans Tue, 22 May 2012 13:09:34 +0000 http://wordpress.org/?v=2.7 hourly 1 By: bostonianinmo http://www.personal--loans-blog.com/united-states/can-personal-loan-interest-be-tax-deductible-if-you-use-the-loan-to-buy-property/comment-page-1#comment-26 bostonianinmo Sat, 11 Oct 2008 09:26:43 +0000 http://personal--loans-blog.com/united-states/can-personal-loan-interest-be-tax-deductible-if-you-use-the-loan-to-buy-property/#comment-26 No, you cannot deduct it, at least not for a personal residence. To be deductible the property must secure the payment of the loan. A personal loan fails that test as there is no security other than your signature on a personal loan. Now, if you're buying the property for investment purposes the rules change. You are allowed to deduct interest on a loan for an investment, limited to the profit that you make on the investment. If it's a buy and hold purchase, you may deduct the interest paid when you sell the property fora profit, limited to the profit that you made. This is one of those cases in the Tax Code where an expense is carried to future years as opposed to being used in the year that the expense was incurred. No, you cannot deduct it, at least not for a personal residence. To be deductible the property must secure the payment of the loan. A personal loan fails that test as there is no security other than your signature on a personal loan.

Now, if you’re buying the property for investment purposes the rules change. You are allowed to deduct interest on a loan for an investment, limited to the profit that you make on the investment. If it’s a buy and hold purchase, you may deduct the interest paid when you sell the property fora profit, limited to the profit that you made. This is one of those cases in the Tax Code where an expense is carried to future years as opposed to being used in the year that the expense was incurred.

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