Interest deduction

Interest deduction

An interest expense, such as interest on a margin account, that is allowed as a deduction for tax purposes.

Interest Deduction

A reduction in one's taxable income that comes from expense from certain interest payments. For example, the interest one pays on one's mortgage is tax deductible so as to encourage home ownership. Likewise, interest paid on a margin account is often deductible. The United States government uses interest deductions, among other statutory tax advantages, to encourage behavior it supports without mandating it.
References in periodicals archive ?
Maximum interest deduction Deduction phase-out based on modified AGI $2,500
The Tax Court held that the taxpayers were not entitled to take an investment interest deduction for any of the mortgage interest they paid on property they had purchased because they failed to substantiate their claimed allocation of the mortgage debt.
The mortgage interest deduction allows homeowners to deduct their mortgage interest payments from their tax returns, limited to up to $1 million of a mortgage's value.
As Congress continues to debate federal budgetary and tax policy in an atmosphere of debt ceilings and ratings downgrades, the time has come for the mortgage interest deduction to go.
All it will take is a single vote by a lone senator or House member who breaks with his or her party to put the mortgage interest deduction into serious play.
She can't claim the interest deduction because she isn't making the payments, and you can't deduct them because you're not legally obligated for the loan payments.
The home mortgage interest deduction is the third most expensive federal income tax expenditure, with the government expected to forgo about $80 billion of revenue for the deduction in 2009.
Among other changes, the panel is suggesting eliminating the personal mortgage interest deduction on first and second homes, in lieu of giving a 15% credit of mortgage interest paid on primary homes.
Fox would retain subsidies, but he would replace the interest deduction with a tax credit, which means rich and poor alike get the same dollar-value subsidy, and he would cap the subsidy at a mortgage on a $100,000 house.
As we discuss below, most of the benefits of the home-mortgage interest deduction accrue to higher-income households, mainly because lower-income households do not itemize their tax returns.
On the other hand, the mortgage interest deduction does not always result in significant tax benefits due to the manner in which taxable income and the tax liability are determined.