Financial Planning -> Stocks, Bonds etc. -> Borrowing to Invest -> Selling the Stocks
Selling the Stocks and ETFs When You Have Borrowed to Invest
If you have purchased good quality stocks or exchange-traded funds (ETFs), we recommend that you hold them forever (buy and hold). When you sell any investment, you will have to pay tax on any capital gains, lowering your return on investment.
If you sell all or part of an investment that you have purchased with borrowed money (leveraged investments), you should repay the borrowed money, as the interest on that portion of the debt will no longer be tax deductible. Example of our suggestion to keep record-keeping simple:
The above is just a suggestion - certainly not a rule!
Note that if you have sold a stock at a loss, the interest expense may still be deductible - see our article on Disappearing Source Rules.
Previous Borrow to Invest Articles:
Tax Tip: Repay the borrowed money if you sell your leveraged investments. Better yet, hold them forever.
Revised: October 15, 2021
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