Margin Loan

Discussion in 'Accounting & Tax' started by ActiveTrade, 27th Jan, 2009.

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  1. ActiveTrade

    ActiveTrade Well-Known Member

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    Hi all, last year I had a margin call where I had to folk out a large sum of $$$'s to keep shares.

    The value of shares continue to fall and I eventually realised my HUGE losses.

    I am wandering ... can I claim the amount paid towards the margin as a tax deduction ?
     
    ActiveTrade, 27th Jan, 2009
    #1
  2. Simon Hampel

    Simon Hampel Founder Staff Member

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    Nope - a margin call where you add cash to your loan account is effectively just a repayment of principal off your loan. Not deductible.

    Any capital losses you eventually realised when selling your shares can be carried forward to offset against future capital gains.
     
    Simon Hampel, 27th Jan, 2009
    #2
  3. ActiveTrade

    ActiveTrade Well-Known Member

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    Bummer ! Thanks Sim for clarifying.
     
    ActiveTrade, 27th Jan, 2009
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  4. seaview

    seaview Well-Known Member

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    However, if you used borrowed funds (eg from a loan account designated as "for investment only" to top up your margin loan, then I believe the interest on those borrowings is deductible against taxable income. (This process is akin to refinancing, you just need to keep records of it all).
     
    seaview, 28th Jan, 2009
    #4