f I need to borrow money to invest in stock market, what's more attractive from the tax/cost perspective between using home equity and margin borrowing offered by the broker? I think the home equity interest might be (partially) tax deductable. The margin interest may be counted as investment cost. But I don't know how the investment cost is treated. Is it fully deducted from your investment gain or what? THanks.
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Forget the tax/cost perspective and look at the risk perspective. If you are a lousy stock picker would you rather lose your investment or your house? For what it's worth, margin interest is deductible as an itemized deduction to the extent you have investment income. Except in some less common circumstances, it doesn't affect your investment gain. Ira Smilovitz
Both investment interest and home equity interest are deductible on Schdule A, but with different limits,
Investment interest is limited to investment income.
Home equity interest is limited to $100,000 principal on the main home or one second home.
Home equity interest is not deductible for AMTI, so may throw you into AMT.
Traceability may apply to investment interest.
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