Tax Tip
Use Your Home for More BorrowingYou can deduct the interest on more than $100,000 of home equity funds if you use the additional borrowing for a business or investment purpose.
Even if you reach the $100,000 limit on deductible home equity borrowing, you can borrow additional money if you spend the money on a purpose for which borrowing produces deductible interest under general rules. Two examples are:
Business interest is deductible, so if you use the money to start a sideline business, the interest will be deductible.
Investment interest is deductible to the extent you have investment income, so if you use the money to invest in a child's business, you may be able to deduct the interest you pay.
Caution: Keep records that enable you to trace how borrowed funds are spent, to be sure you secure the deduction.
Keep accurate records and you will pay less out in taxes each year. By increasing your deductions on several things you will notice this at tax time.
This tip is a starting point for limiting your taxes. All the information is not included here due to space limitations. Always consult a professional before using a tax tip. These tips should be used to ask your CPA or investment advisor about.
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If you prepare your own tax return, take a look at these 10 tips to help you. Look at our
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Last modified:
February 26, 2001