Interest payments on personal loans are not tax-deductible. However, there are exceptions. For example, interest paid on personal loans used to pay for business expenses or qualified educational costs can be deducted from your annual taxes, which will reduce your taxable income.
Personal loans are a financial tool you may want to have in your tool belt. They can be an excellent tool to pay down credit card debt or make a major lifestyle change. SuperMoney’s in-depth guide on best personal loans is a great place to decide what personal loan is right for you! However, the tax implications of personal loans are confusing and dependent on what expenses you use the loan for. Below, we break down how personal loans may affect your tax returns.
Can a personal loan be tax deductible?
As a general rule, interest payments on personal loans are not tax-deductible as with mortgages and student loans. For example, if you borrow money to purchase a car or cover other personal expenses, the interest payment will not reduce your taxes because it is a living expense and not income. However, you may be able to take a tax deduction if you meet certain eligibility requirements and use the loan for specific purposes. Continue reading “Get Competing Personal Loan Offers In Minutes”