Definition: Interest on debt allocated to property held for investment under the applicable federal tax rules.
Example
A taxpayer borrows to acquire an investment asset and determines whether the interest falls under the investment-interest rules.
Keep the distinction clear
Deductibility can be limited by net investment income. Rental, business, and personal interest may follow different rules; the collateral alone does not determine the category.
Related terms
Interest · Investment · Taxable Income
Keep studying
References: IRS Topic 505: interest expense
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