Printer Friendly

DON'T FORGET AN IMPORTANT LAST-MINUTE TAX DEDUCTION: INTEREST; "PRICE WATERHOUSE PERSONAL TAX ADVISER" OUTLINES THE RULES

 DON'T FORGET AN IMPORTANT LAST-MINUTE TAX DEDUCTION: INTEREST;
 "PRICE WATERHOUSE PERSONAL TAX ADVISER" OUTLINES THE RULES
 NEW YORK, April 6 /PRNewswire/ -- Interest expense continues to be one of the largest deductions on many individual tax returns. The following is a last-minute reminder on the deductibility (or nondeductibility) of various types of interest expenses on 1991 tax returns. According to the "Price Waterhouse Personal Tax Adviser," the more you know about the deductibility of interest, the wiser your borrowing habits will be.
 Personal Interest
 This year, for the first time, a deduction is no longer allowed for any portion of interest paid on personal expenditures. Examples of expenditures that can generate personal interest include: amounts borrowed for vacation, clothes, family automobiles, home furnishings, and to pay off clothes, family automobiles, home furnishings, and to pay off credit card debts.
 Investment Interest
 A deduction for interest on investment indebtedness is limited to your net investment income for the year. Net investment income is the excess of investment income over investment expenses. Investment income includes income from stocks and bonds and other assets purchased and held for investment. However, any interest expense that exceeds your net investment income can be carried over to future years and deducted to the extent of net investment income in those years.
 Home Mortgage Interest
 Qualified home mortgage interest will be 100 percent deductible on loans secured by primary or secondary residence. Qualified home mortgage interest is generally divided into two categories: interest on acquisition indebtedness and interest on home-equity debt. Acquisition debt is a loan secured by your primary or secondary home and whose proceeds are used to buy, build or substantially improve the home. Generally, there is a $1 million ceiling on the acquisition debt. Home- equity debt is a loan secured by your primary or secondary residence but the proceeds are not used to buy, build or substantially improve the home. There is a $100,000 ceiling for second mortgages or home equity debt.
 Caution: If you are subject to AMT, you may not deduct interest on home equity debt unless the proceeds are used to buy, build or substantially improve your home. (This differs from the deductibility of home-equity interest for regular tax purposes.)
 Points
 The deductibility of points depends on whether they were incurred in connection with the mortgage for the original purchase of a residence, or a subsequent refinancing (including home equity loans). Points paid in connection with the original purchase are deductible in full when paid. The loan must be secured by your residence and must be incurred by you in connection with the purchase (as opposed to an improvement) of your principal residence.
 However, points incurred in connection with the refinancing of an existing mortgage or in obtaining a home equity loan are not deductible currently -- the deduction is prorated over the life of the loan, an existing mortgage or in obtaining a home equity loan are not deductible currently -- the deduction is prorated over the life of the loan.
 Please note that beginning with 1991 returns, certain itemized deductions may be reduced if adjusted gross income (AGI) exceeds the AGI threshold. For 1991 returns, if your AGI exceeds $100,000 ($50,000 for married filing separately), you must reduce certain itemized deductions by an amount equal to 3 percent of the amount of AGI in excess of the $100,000 (or $50,000) threshold. Investment interest is not subject to this new rule, but mortgage interest and points are.
 "The Price Waterhouse Personal Tax Adviser" is part of the firm's three-volume Advisers Series. Other books in the series include "The Price Waterhouse Retirement Planning Adviser" and "The Price Waterhouse Investors' Tax adviser." The Advisers Series contains information to help readers enhance their own financial pictures and provides readers the information needed in these economic times when every dollar counts. Published by Pocket Book, a division of Simon & Schuster, the books are available for $5.99 each in bookstores nationwide.
 -0- 4/6/92
 /CONTACT: Judy McMillan of Price Waterhouse, 212-790-4715/ CO: Price Waterhouse ST: New York IN: FIN SU:


AH-TQ -- NY034 -- 5349 04/06/92 12:10 EDT
COPYRIGHT 1992 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Apr 6, 1992
Words:689
Previous Article:BALL CORPORATION ELECTS W.A. LINCOLN, D.B. SHELDON TO HEAD METAL PACKAGING UNITS
Next Article:ILLINOIS BELL FIRST AMERITECH COMPANY TO REACH UNION PACT; ANNOUNCES EARLY SETTLEMENT WITH LARGEST UNION
Topics:


Related Articles
JOB-HUNTING EXPENSES MAY BE TAX-DEDUCTIBLE; PRICE WATERHOUSE OUTLINES WRITE-OFFS
PRICE WATERHOUSE PERSONAL TAX ADVISER OUTLINES LAST MINUTE TAX TIPS
PRICE WATERHOUSE EXPLAINS 'TAX CHANGES: WHAT'S IN STORE'
FIVE TAX TIPS FOR YEAR-END PLANNING
ACT NOW, SAVE LATER: PRICE WATERHOUSE OFFERS LAST-MINUTE YEAR-END TAX PLANNING TIPS TO SAVE 1992 TAX DOLLARS
PRICE WATERHOUSE OFFERS STRATEGIC TAX PLANNING
PRICE WATERHOUSE: IRS GUIDANCE OUT ON EXECUTIVE COMPENSATION RELIEF
PRICE WATERHOUSE: PULLING IT TOGETHER
KPMG PEAT MARWICK OFFERS LAST-MINUTE TIPS FOR PROCASTINATING TAX FILERS
THE TAX FILING COUNTDOWN IS ON. NEED MORE TIME? HERE'S HOW TO OBTAIN AN EXTENSION, AVOID PENALTIES AND MINIMIZE INTEREST CHARGES

Terms of use | Copyright © 2016 Farlex, Inc. | Feedback | For webmasters