Don’t try the prepay fiddle

If focussing on the tax benefits of prepaid interest, don’t try and pull a swifty by taking out a loan, prepaying interest, then cancelling the loan and getting a refund of the interest after claiming the deduction. It won’t work. Prepaid interest cannot be refunded. As a tax strategy, margin loans and prepaying interest are only beneficial if you plan on actually investing the borrowed funds.

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