The newest proceeds of the the fresh new financing were utilized to pay off the outdated financing
To cease so it negative cures, a taxpayer should think about taking out fully several household-security financing while making the fresh new election into the you to utilized for team intentions
If the H spends the general tracing laws and regulations, the attention costs from the $fifty,one hundred thousand financing is completely deductible just like the business appeal towards the his Agenda C. The eye costs decreases his normal and you will worry about-work tax. Additionally, it reduces AGI, that could improve AGI-sensitive deductions and you can credit. When the H treats the latest $fifty,000 loan because household-equity financial obligation, the attention is deductible just like the an enthusiastic itemized deduction to have regular tax (susceptible to new itemized deduction phaseout guidelines). » Read more