Cash Flow Planning for Life - Helping you reach your personal & professional financial goals.

Cash Flow Planning for Life

Helping you reach your personal & professional financial goals.

1: Know What is Tax Deductible and What’s Not

Posted by Mark On October 19th

Know What is Tax Deductible and What’s Not

This is the first installment of Tax Deductions & You: What You Need to Know which can also be downloaded from our free eBook library.

When tax time roles around, you will need to take a look at the various types of loans and credit lines to see which are tax deductible and which are not. These may include:

  • A home mortgage
  • Credit cards
  • Auto loans
  • Lines of credit
  • Home equity lines of credit
  • Margin loans
  • Investment properties (vacant land and rental units)
  • Personal loan interest

The tax code is very specific in some cases and vague in other cases. This eBook will attempt to explain the differences in loans. It will also give you some ideas on how to generate cash flow when it comes to deducting interest for tax purposes.

First, let’s define what is NOT tax deductible…Personal interest. This includes credit cards, auto loans, personal loans, and interest incurred on tax debt.

Some interest is tax deductible. However, there are certain limitations. These include:

  • A home mortgageTax Deductions and You - What You Need to Know
  • Home equity lines of credit
  • Investment and stock margin loans
  • Student loan interest

IRS publication 17 and 936 explains, through flow charts, how and where interest is deductible.

To maximize cash flow when it comes to deducting interest, you may be better off changing the characteristic of the interest or capitalizing the interest into the cost of vacant property.

If you are interested in learning more about tax deductions or if you are in need of a Fort Myers CPA, we are here to help. Makara and Associates is committed to education and cutting edge technologies to offer superior services to you. To learn more, check out our list of frequently asked questions. You may find the answer to your question. If you would like further assistance please contact us online, call (239) 384-9688, or follow us on Twitter.

– Mark

This information is based on facts, assumptions and representations as stated and authorities that are subject to change. We will not update this information for subsequent legislative or administrative changes of future judicial interpretations.
LEGAL NOTICE AND DISCLAIMER: The information within this blog is for informational and educational purposes only and is not tax advice and should not be used as such. The facts of each individual situation can have significantly different outcomes when applying tax law. The hiring of a CPA is an important decision not to be based solely on advertisements.

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