Prepay interest for tax benefits
Most borrowers are able to claim margin loan interest and other costs of investment as tax deductions – depending on personal circumstances. Prepaying twelve months in advance just before the end of the tax year is the way to make the most of the tax benefits. By paying a year’s interest in June, the deduction can be enjoyed almost immediately in your upcoming tax return in July. But be aware that this really only amounts to tax deferment, not tax reduction. Investors are only bringing forward a tax deduction by one year, not reducing overall tax in the long run.