No, niether has to return a profit. The vehicle certainly won't. The investment might, you never know. But if you borrow to invest you do get the write off.
This is not exactly true. Interest paid on a loan for an investment isn’t always deductible. For example, if you lose on the investment.
I'm not sure how it works in the US. Up here in the frozen north as long as you are attempting to make a profit the interest is deductible.
I don’t know Canadian tax law but I’m sure there are safeguards in place to prevent tax arbitrage. Otherwise, people who create tax shelter products would easily game the system. Another example: you cannot deduct interest on a loan to buy tax-free investments (government bonds). I have no desire to research Canadian tax law so I don’t know how this example would be treated up there.
The point I'm trying to make is that you shouldn't borrow to buy depreciating assets. Car's vacations etc.
What point were you trying to make about deductible interest on an investment? Didn’t you suggest selling an investment to buy the car and then borrowing to buy the investment back to get a deduction? Personally I dislike debt. But I grew up in an era when interest on consumer debt was fully deductible and it was what allowed many people the benefit of itemizing deductions on Schedule A instead of taking the small (at the time) standard deduction. Most taxpayers today probably don’t know this.
%% WOW his inability to admit losses turned a rabbit hole in to the grand canyon , so to speak. A few times\a skillful counselor may help; especially if he avoided muddy psycho-babble. So assume he or she was skilled, as Dr. Aari Kiev MD was . His example of a trading ''personal flaw'' was the hedge fund manager, never willing to buy @ market+ missed to many good moves Dr Ari K noted it was due to a his nickel..... up/bringing. No telling how much dirt Jack Schwager had to edit out \ to find that gold, so to speak/LOL
Just that I wouldn't borrow to buy a depreciating asset. I'm not familiar with US tax law so if interest on a car loan is deductible my strategy of making interest deductable won't work.
%% I am somewhat familiar with USa tax laws\ but i'm not a CPA= dont want to be LOL So few autos appreciate, sounds like you are right anyway. [Even though strangely/ some did go up a bit past few years, but lately same old autos are going down in value again] Even a good appreciating asset like real estate like a home; some lost money overpaying without a BPO [broker price opinion] or appraisal. Leverage on that bad buy made it worse regardless of any tax deduction. I offered a REALTOR friend of mine a $5.00 gas card for showing me some real estate after he did that. I admitted it was not much but more than most any would do. LOL He declined that + enjoyed the psychology of me figuring i owed him something; sure enough out turned out win win for both of us
%% I think that also named that a personality test; i did that in my late twenties + still study it. Cant fail it /LOL; its like sunlight . FLo Littauer [books]names them like so; talker, thinker, worker, watcher. And then there are the blends; sorta like Pro Insurance Co or State Farm Insurance has a lot of smaller companies they own, in different places. First + last on list are extraverts; other 2 are intoVerts...................................................