Many miscellaneous costs related to investing in securities may be deducted from your taxes.
For instance, you can deduct the interest on the loans you take out to purchase said investments. However, the interest you deduct may not exceed the net income brought in by the investment. Use IRS Form 4952 to calculate what you can deduct.
You cannot deduct expenses associated with the initial purchase or sale of a security, such as brokerage fees, trading commissions, or fees to become part of a mutual fund. These fees are bundled in with the sale price, which might advantageously make your capital gains smaller than they would otherwise be.
The investment expenses you may deduct, according to the IRS, are those which are “reasonable and proximate” associated with the production of income. This includes the cost of investment research, annual fees to maintain the account, and the aforementioned interest. You generally cannot deduct travel costs to attend stockholder meetings, but you can deduct wear and tear on your computer if you use it primarily for trading. These expenses must add up to at least 2% of your adjusted gross income to be deductible, unless you are a qualified trader.
Keep in mind that you must be the person who incurred these expenses in order to deduct them. For example, if you are the beneficiary in an account owned by a trustee, the trustee may deduct the interest, not you.
I bought a foreclosure as an investment property. Can I deduct the expenses for re-habbing the place. Such as, flooring paint, kitchen cabinets and countertops?
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