Line Of Credit
What Your CPA Isn't Telling You: Life-changing Tax Strategies
Mark J. Kohler (Paperback) Entrepreneur Press 2011-02-23
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Answers
Interest on home equity loans is deductible.within limits.
Usually, if a person uses a home equity loan for debt consolidation, home improvements or to pay for tuition, the interest is fully tax deductible ...
Would a Home Equity Line of Credit or loan used to buy a home be considered a Home Aquisition Debt instead of a Home Equity Debt?
For HELO interest on principal beyond $100k to be deductible, the proceeds must be plowed back into the property pledged as security. If it's used for any other purpose, the interest on the amount of the loan over $100k is non-deductible. To be considered as acquisition debt, the property acquired must be the security for the loan.
If possible, please provide a link to any IRS publication or ruling (www.irs.gov). Thank you.
The interest on the two mortgages is deductible, but if you're borrowing money to pay loans, then the money you are borrowing that is unsecured is not deductible.
The loan must have a mortgage filed against it to be deductible.
You can not borrow your way out of debt. You need to sell the house and get your financial housekeeping cleaned up. This is a very bad plan!
With a credit line I receive a 1099 declaring Interest paid from the bank. I receive nothing from the Credit Card company however both must be paid. My accountant does not believe A Business Credit Card Interest is Tax Deductible. I believe that both are viable forms of credit extension therefore reasonable and legal forms of business to finance service or goods. Can anyone provide additional information to short term finance interest expenses. Thank You. Business Minded.
When I said a line of credit it is a business line. Not a home line of credit. The Business Credit card is actually used strictly for business. It is used to purchase equipment or short term purchases of 1000 to 10,000 for 2 to 6 months because my suppliers only except credit cards. I could pay off with line of credit each month however, payment terms are not as flexible as Credit Card.
Credit and finance costs are always valid business expenses as long as they are reasonable and necessary. If your accountant says that they are not, find a competent accountant; yours is not.
This assumes of course that you are talking about business expenses. A "business" card used for personal expenditures would not generate deductible interest of course, whether you owned a business or not.
Is it better to take $20,000 cash and pay down a tax-deductible home equity line of credit or put that cash in a 1-year CD yielding 5.5% interest? The monthly payments on the home equity $20K would be more than the interest earned but since they are tax deductible, does this make more sense?
reducing your debt load is always a good idea
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Dan Robertson of Agler & Gaeddert Chartered shares some year-end tax tips.
Capital gains
Capital gains is an area for 2009 and 2010. The tax rate on long-term capital gains is 0 percent for individuals who are in the 10- or 15-percent income tax bracket. So people still have time if they want to sell some things and pay no federal tax. If people are in a higher bracket, there is still some opportunities to gift some to their kids and their kids can sell it. But there are some different rules that apply.
Energy credits
There are still the energy credits. They are for 2009 and 2010 but if you want it for this year, you need to do it now. It is for insulation, windows, doors and roofs. People can get a credit of 30 percent of what they purchase or up to $1,500. People need to make sure they get a manufacturer’s certification. You don’t have to turn it in with taxes but you have to keep it on file in case the IRS ever asks for it.
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