Securities loan (aka margin loan) interest tax deductions | Investment interest expense deduction

Did you know that you can deduct interest that you're paying on your margin loan against income generated from your portfolio? This is through something called the investment interest expense deduction.
This is a valuable, yet slightly nuanced deduction. Watch this short video to learn how to maximize this deduction for you.
➡️Video! What are securities loans (aka margin loans) and how to use them: • What are securities lo...
Chris Kaminski, CFP®, RICP®, ChFC®, CLU®, CLTC®
Forbes Best-In-State Top Next-Gen Wealth Advisor 2023
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The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor's particular investment objectives, strategies, tax status or investment horizon. You should consult your attorney or tax advisor.
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[@edbrandt8972]

Great explanation. This deduction method probably will not work for me, but it's good to know how it works.

[@ConsilioWealth]

Glad it helped!!

[@XNDTRADES]

Is it possible to not pay the interest? For example I got 1 stock worth 1K I borrow 500, then I get 6% anual interest, that interest I must pay it or can it just be paid in equity so then the margin call would be before (at 560$ valuation for company) Also with interest rates changing when does it apply and refresh to new interest rates? Thank you

[@ConsilioWealth]

It sounds like you might be talking about sec lending? (securities lending). This is different than margin loans. Interest rates for margin loans are typically based on SOFR, Fed Funds, or some other similar metric plus a spread. Fed Funds changes when the Fed changes interest rates. SOFR also somewhat follows the Fed's rate movements but trades daily. It is possible to get fixed rates on margin loans but most of the time they are variable.

[@XNDTRADES]

@@ConsilioWealth I didnt mean that I meant not being forced to pay the interest just accumulate it so margin call is earlier. That way it cashflows more- I already found the answer with IBKR and yes you can