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Keith, I am getting a bit confused about the replies I got from my earlier post, so hopefully you can provide a bit of clarity about the issue. In year 0, 1.4m was invested in shares through a margin loan with 400k debt. In year 1, the interest on the 400k debt is tax-deductible. At 8%...

In this case, the purpose of the loan is to invest in shares. The original loan was to buy shares, not to fund living expenses. Could the fact that you are using dividends for living expenses make the interest not tax deductible? Or are you saying that, the next year, interest on the debt...

I don't understand what you are trying to say. The interest is the interest on the investment loan (the margin loan), so it is definitely tax-deductible.

Capitalising interest means that, instead of paying off the interest, you are adding the interest to the loan balance. So in effect you don't have to pay anything but your debt increases. Cheers,

First, thanks for a great post and a great thread keith. Your story is very inspiring. This may seem a bit late. I have been away from the forum for most of this year since we've moved to London. It got me thinking further about living of equity, as I've been considering for a while what...