Margin Interest Tax Deductable?

[questrader]

Line 221 – Carrying charges and interest expenses

most interest you pay on money you borrow for
investment purposes, but generally only as long as you
use it to try to earn investment income, including interest
and dividends. However, if the only earnings your
investment can produce are capital gains, you cannot
claim the interest you paid. For details, contact us.

WTF? So, how would you make use of the interest you pay borrowing money from your margin trading account for the sole purpose of making a capital gain? Any help would be appreciated.

[nuberific]

I believe the idea is that the investment must have the potential of giving dividends. Meaning interest you paid for loans on stock/mutual fund investments will be tax deductible.

[questrader]

^ Oh ic. Good point!

[pitz]

You can deduct the margin interest just as long as you used the margin loan to buy the debt or equity of a *business*.

Buying commodities or commodity ETFs (ie: GLD, SLV, USO, U) doesn't qualify.