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Author: tangofan Three stars, 500 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121599  
Subject: Using CC balance transfer for investment Date: 6/30/2009 4:29 PM
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Hi all,

This is a question somewhat similar to one I asked a while ago re. the deductiblity or credit card interest, if I use the balance for investment purposes ( http://boards.fool.com/Message.asp?mid=25187261&sort=who... )

The situation is as follows:
My CC company offers a low APR for two years on a balance transfer. It will charge a balance transfer fee.

I am considering taking advantage of this offer to pay down a margin loan in a brokerage account. However this is only worth it, if I can deduct the CC interest as investment interest expense. The CC account will carry a zero balance on the next statement, so there won't be any mingling of interest for purchases with the balance transfer.

The wisdom of this approach aside, I have the following questions:
- I understand that if I use the transfer for investment purposes such as paying down a margin loan, I can deduct it as investment interest expense (based on the previous question referred to above).
This time though I will have to pay a balance transfer fee. I assume this is not deductible as an investment interest expense, but only as a misc. investment expense. Is this correct?

- Since I will be paying interest on both the balance transferred and the balance transfer fee, can I deduct the entire interest as investment interest expense or is the portion of interest that I'm paying on the balance transfer fee also a misc. investment expense instead of an investment interest expense?

Thanks for any insight on the matter,

Bernhard
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