Deducting interest on student loans 2012

 

deducting interest on student loans 2012

TurboTax / Tax Calculators & Tips / All Tax Guides / Home Ownership / Deducting Mortgage Interest FAQs

If you're a homeowner, you probably qualify for a deduction on your home mortgage interest. The tax deduction also applies if you pay interest on a condominium, cooperative, mobile home, boat or recreational vehicle used as a residence.

If you itemize, you can usually deduct the interest you pay on a mortgage for your main home or a second home, but there are some restrictions.

Deducting interest on student loans 2012

An interest rate , or rate of interest , is the amount of interest due per period, as a proportion of the amount lent, deposited or borrowed (called the principal sum ). The total interest on an amount lent or borrowed depends on the principal sum, the interest rate, the compounding frequency, and the length of time over which it is lent, deposited or borrowed.

It is defined as the proportion of an amount loaned which a lender charges as interest to the borrower, normally expressed as an annual percentage. [1] It is the rate a bank or other lender charges to borrow its money, or the rate a bank pays its savers for keeping money in an account. [2]

Annual interest rate is the rate over a period of one year. Other interest rates apply over different periods, such as a month or a day, but they are usually annualised .

TurboTax / Tax Calculators & Tips / All Tax Guides / Home Ownership / Deducting Mortgage Interest FAQs

If you're a homeowner, you probably qualify for a deduction on your home mortgage interest. The tax deduction also applies if you pay interest on a condominium, cooperative, mobile home, boat or recreational vehicle used as a residence.

If you itemize, you can usually deduct the interest you pay on a mortgage for your main home or a second home, but there are some restrictions.

TurboTax / Tax Calculators & Tips / All Tax Guides / Home Ownership / Buying a Second Home - Tax Tips for Homeowners

Buying a second home? TurboTax shows you how mortgage interest, property taxes, rental income, and expenses will affect your tax return.

If you use the place as a second home—rather than renting it out—interest on the mortgage is deductible within the same limits as the interest on the mortgage on your first home.

Interest you pay on business loans is usually a currently deductible business expense . It makes no difference whether you pay the interest on a bank loan, personal loan, credit card, line of credit, car loan, or real estate mortgage. Nor does it matter whether the collateral you used to get the loan was business or personal property. If you use the money for business, the interest you pay to get that money is a deductible business expense. It’s how you use the money that counts, not how you get it. Borrowed money is used for business when you buy something with the money that’s deductible as a business expense.

Example: Max, the sole proprietor owner of a small construction company, borrows $50,000 from the bank to buy new construction equipment. He pays 6% interest on the loan. His annual interest is deductible on his Schedule C, Form 1040, because it is for a business loan.

Your deduction begins only when you spend the borrowed funds for business purposes. You get no business deduction for interest you pay on money that you keep in the bank. Money in the bank is considered an investment—at best, you might be able to deduct the interest you pay on the money as an investment expense.