Question : Can personal loan interest be tax deductible if you use the loan to buy property?
If you get a conventional mortgage, your interest is tax deductible. If I take out a personal loan to buy my primary residence, can I deduct interest from that personal loan when I file my taxes?Thanks.
- asked by gabyrig
All Answers:
Answer #1
No, you cannot deduct it, at least not for apersonal residence. To be deductible the propertymust secure the payment of the loan. A personalloan fails that test as there is no security otherthan your signature on a personal loan.Now, ifyou're buying the property for investment purposesthe rules change. You are allowed to deductinterest on a loan for an investment, limited tothe profit that you make on the investment. Ifit's a buy and hold purchase, you may deduct theinterest paid when you sell the property foraprofit, limited to the profit that you made. Thisis one of those cases in the Tax Code where anexpense is carried to future years as opposed tobeing used in the year that the expense wasincurred.
- answered by bostonianinmo
| 
