You are legally liable for the acquired debt.Percentage deductible: 100% (up to an amount equal to 30% of your taxable income).With the same income and interest in 2021, you can take only a $30,000 deduction (30% of your taxable income). If your taxable income is $100,000, and you paid $60,000 in interest on your loan, you could claim $50,000 (50% of $100,000) of that interest as a deduction. For the 2020 tax year, you could deduct that interest, but your maximum deduction would be equal to 50% of your taxable income. What does that mean? Say you take out a loan for your small business, and you pay interest on that loan. The interest expense deduction has gone down from 50% of your taxable income to 30% of your taxable income. There is a limit on this, however, and it has changed for the 2021 tax year. If you take out a loan for business purposes (including a mortgage on business real estate) or obtain a line of credit for business purchases, the interest you pay is tax deductible. Exorbitant prices for extravagant meals likely won’t qualify as a deductible business expense.
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