Investment Interest

Investment interest is interest paid on money you borrowed that is allocable to property held for investment. It doesn't include any interest allocable to passive activities or to securities that generate tax-exempt income.

Complete and attach Form 4952 to figure your deduction.

Exception.

You don't have to file Form 4952 if all three of the following apply.

Your investment interest expense is less than your investment income from interest and ordinary dividends minus any qualified dividends.

You have no other deductible investment expenses.

You have no disallowed investment interest expense from 2024.

Alaska Permanent Fund dividends, including those reported on Form 8814, aren't investment income.

For more details, see Pub. 550.