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tl;dr: borrowed money to live because asset rich Even better might have been to borrow $25k more to buy the assets in the first place, then the interest is tax
by quickthrower2 3y ago
tl;dr: borrowed money to live because asset rich
Even better might have been to borrow $25k more to buy the assets in the first place, then the interest is tax deductible possibly
- nocoiner 3y agoWell, yeah, if he’s a corporation.
- quickthrower2 3y agoNot sure how US tax works but in Australia an individual can borrow to invest and deduct interest.
- nocoiner 3y agoI believe from the facts that are known, he’s quite obviously not Australian, so alas, probably no deductibility for personal debt.
- sgerenser 3y agoThe U.S. also has an “investment interest expense” deduction[1]. Normally this is used with margin interest, but if any other type of loan (e.g. credit card advance) is taken out specifically to invest in securities, interest on said loan becomes deductible investment interest as well. [1] https://www.irs.gov/pub/irs-pdf/p550.pdf https://www.irs.gov/pub/irs-pdf/p550.pdf
- WinnieRallycar 3y agoThe concept of borrowing against your investments is new to me, but it reminded me of debt recycling against your home. In principle, I can see the advantage, but like all debt it requires great discipline. With "only" $75k in assets, I agree with you that he'd be wiser to purchase more stocks than fund his lifestyle.