Neg Am Loans 2

What interest do you get to deduct on a Negative Amortization Loan? You get to deduct the interest when it is paid. When you make your minimum monthly payment, the whole payment is usually interest so for most people it is all deductible.

But the payment on a Negative Amortization loan does not cover all the interest. Some of the interest is added to principal.

What happens with that interest? When you pay off the loan- either selling or refinancing-, the interest that was "deferred" will be listed on the payoff statement. This interest is deductible for most people. A nice deduction, especially if the gain on the sale will be taxed.

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