mortgage interest deduction from capital gains

[bbull]

I have no income last year other than short-term trading income. Now since normally I deduct mortage interest from the employee income, I was wondering if mortgage interest deduction can be used against short-term trading income?

Thanks.

 

[traderstatus]

Quote from bbull:I have no income last year other than short-term trading income. Now since normally I deduct mortage interest from the employee income, I was wondering if mortgage interest deduction can be used against short-term trading income?

Mortgage interest generally is not deductible against employee income (assuming USA resident taxes). Primary residence mortagage interest is an itemized deduction, and as such it can reduce taxable income for all sources, including capital gains.

 

[Mike805]

Quote from traderstatus:

Mortgage interest generally is not deductible against employee income (assuming USA resident taxes). Primary residence mortagage interest is an itemized deduction, and as such it can reduce taxable income for all sources, including capital gains.

Can you provide some sources for this? I have held the belief that ALL mortgage interest is deductible... ??

 

[crazy_trader]

Get a tax software, simple as that.

Quote from Mike805:

Can you provide some sources for this? I have held the belief that ALL mortgage interest is deductible... ??

 

[traderstatus]

Quote from Mike805:Can you provide some sources for this? I have held the belief that ALL mortgage interest is deductible... ??

You may have gotten that belief listening to the hordes of refinace mortgage brokers out there. It's a shame when taxpayers get their tax education from biased parties like a mortgage loan broker or a real estate broker, and THEN go see their accountant to learn the facts.

The default is that ALL interest is NOT deductible, UNLESS the situation meets some specific areas that US Congress has decided to encourage.

Primary Owner occupied home ownership and a 2nd home are two of those - under certain conditions (initial acquisition debt, total under $1M, no excess debt on a refi, etc).

To be used in a trade or business, so to stimulate the economy is another.

To a more limited extent mortgaged rental property and margin debt for investments can offer some tax reduction. Student loans and loan "points" are two others with some limited value.

for source try www.irs.gov and search for interest expense