Question
Mortgage Interest or Investment Interest Expense Deduction?
My client borrowed $500,000 from a bank and pledged his stocks/bonds as collateral. The proceeds were used to build a new home. He's asking me if he can deduct the interest on the loan as mortgage interest. I think the answer is no because it's not qualified mortgage indebtedness - needs to be secured by the home, which the loan was not.
He's now asking me if he can deduct it as margin interest (or investment interest expense) on Form 4952. Is that a possibility?
