Investment Interest Deduction Calculator
Calculate deductible investment interest expense (Form 4952).
Investment Interest Summary
Current Interest:$ 5000
Prior Carryover:$ 0
Total:$ 5000
Net Investment Income
Without Election:$ 2000
(excludes QD/LTCG)
With Election:$ 13000
(includes QD/LTCG)
Deduction Comparison
| Scenario | Deductible | Carryover | Tax on QD | Tax on Gains | Net Tax |
|---|---|---|---|---|---|
| Without Election | $ 2000 | $ 3000 | $ 450 | $ 1200 | $ 1170 |
| With Election | $ 5000 | $ 0 | $ 720 | $ 1920 | $ 1440 |
Election Analysis
Tax Impact:$ -270
Election:Not Beneficial
Election makes QD/LTCG taxable at 24% instead of 15% but allows more interest deduction.
Recommendation
Election NOT beneficial. Keep QD/LTCG at preferential rates. Deduction limited to $2000. Carryover: $3000. Consider paying down investment debt.
Investment Interest Key Points
- Interest on loans for investments
- Deduction limited to NII
- QD/LTCG excluded by default
- Election to include QD/LTCG
- Election makes them ordinary income
- Carryover unused interest indefinitely
- Form 4952 for calculation
- Attach election statement
- Track carryover year to year
- Consider paying down debt