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  • loan to invest in IRA

    Hi,
    In the book More Wealth Without Risk by Charles Givens it was mentioned
    that if one borrows money to invest in an IRA, then the interest on that
    loan is tax deductible. Is there any truth to this? I have not been able
    to find any information on this. I would appreciate your insight.

    Thanks.

  • #2
    loan to invest in IRA

    "aguy" <[email protected]> wrote in message
    news:[email protected]
    Hi, In the book More Wealth Without Risk by Charles Givens it was mentioned that if one borrows money to invest in an IRA, then the interest on that loan is tax deductible. Is there any truth to this? I have not been able to find any information on this. I would appreciate your insight. Thanks.
    Here is a good explanation (an IRA is a taxable investment; the tax is just deferred until $ is distributed):

    http://www.missouribusiness.net/irs/...s/p550-014.htm


    Comment


    • #3
      loan to invest in IRA

      "aguy" <[email protected]> wrote in message
      news:[email protected]
      Hi, In the book More Wealth Without Risk by Charles Givens it was mentioned that if one borrows money to invest in an IRA, then the interest on that loan is tax deductible. Is there any truth to this? I have not been able to find any information on this. I would appreciate your insight. Thanks.
      Here is a good explanation (an IRA is a taxable investment; the tax is just deferred until $ is distributed):

      http://www.missouribusiness.net/irs/...s/p550-014.htm


      Comment


      • #4
        I don't know about that. The thing is does it make sense to borrow to invest in an IRA. IRA tax deductibility is dependent on retirement plan status with an employer to some extent, so it may not make sense for many to have an IRA if they are part of employer retirement plans like 401K's or other retirement plans, and there are also income limitations for deductibility. Also, does it make sense to pay interest on money to earn interest on money likely less than the money you are paying interest on. I suggest that you visit the IRS site to read up on IRA deductibility. Another source that may be able to help is Suze Orman's financial strategy books.

        Comment


        • #5
          loan to invest in IRA

          In article <[email protected]>,
          aguy <[email protected]> wrote:
          In the book More Wealth Without Risk by Charles Givens it was mentionedthat if one borrows money to invest in an IRA, then the interest on thatloan is tax deductible. Is there any truth to this? I have not been ableto find any information on this. I would appreciate your insight.
          Interest that can be traced to use for investments would be
          deductible to the extent you had that much investment income.

          Investment income is taxable interest and ordinary dividends, as
          well as short term capital gains. Investment income here does not
          include qualified dividends or long-term capital gains to the
          extent you choose to have these taxed at favorable rates.

          In this case, I would tend to agree an IRA fits the category of an
          investment. For examople, an IRA fee paid outside of the IRA is
          deductible on Schedule A Line 22 as an investment expense.

          Note that the loan cannot be secured by the IRA itself.

          Now, wheher it is financially wise to borrow money to be
          contributed to an IRA is an entirely different issue.
          --

          __
          Art Kamlet ArtKamlet @ AOL.com Columbus OH K2PZH

          Comment


          • #6
            loan to invest in IRA

            In article <[email protected]>,
            aguy <[email protected]> wrote:
            In the book More Wealth Without Risk by Charles Givens it was mentionedthat if one borrows money to invest in an IRA, then the interest on thatloan is tax deductible. Is there any truth to this? I have not been ableto find any information on this. I would appreciate your insight.
            Interest that can be traced to use for investments would be
            deductible to the extent you had that much investment income.

            Investment income is taxable interest and ordinary dividends, as
            well as short term capital gains. Investment income here does not
            include qualified dividends or long-term capital gains to the
            extent you choose to have these taxed at favorable rates.

            In this case, I would tend to agree an IRA fits the category of an
            investment. For examople, an IRA fee paid outside of the IRA is
            deductible on Schedule A Line 22 as an investment expense.

            Note that the loan cannot be secured by the IRA itself.

            Now, wheher it is financially wise to borrow money to be
            contributed to an IRA is an entirely different issue.
            --

            __
            Art Kamlet ArtKamlet @ AOL.com Columbus OH K2PZH

            Comment

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