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For an individual taxpayer (as opposed to a corporation) only three types of interest are deductible:

1) investment interest

2) business interest

3) interest on a loan secured by a qualified residence.

To deduct investment or business interest, you must follow strict tracing rules that trace the borrowed funds directly to an investment or business purpose. There are also strict rules as to what a qualified residence is and limits on the amounts of home equity loans.

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16y ago

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