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Author: PackySmith Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121572  
Subject: Re: Car Loan interest deductible??? Date: 5/7/1999 4:31 PM
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Interest on car loans is not deductible. It is considered personal interest. The IRS has interest tracing rules that basically say, so you borrowed money, what did you use the money to purchase. If it was stock (margin interest) the IRS consideres that investment interest and it is deductible to the extent of your investment income. The unallowed amount can be carried over to future years. If you borrow money to make a personal purchase using your margin account to do it, the IRS will still consider it personal interest because of the interest tracing rules and would disallow the deduction as investment interest. The exception here is mortgage interest. You can borrow up to 100,000 more on your home and, regardless of what you spend the money on, you can still deduct it as mortgage interest.
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