What type of interest is paid or accrued on money borrowed for investment properties?

Investment interest refers specifically to the interest that is paid or accrued on borrowed money used to purchase investment properties. This type of interest is associated directly with generating income, such as rental income from a property, and it is distinct from other types of interest like mortgage interest, which is the specific interest paid on loans secured by real estate.

When funds are borrowed to invest in properties, the interest associated with that borrowing can often be deducted against the income earned from the investment. However, the ability to deduct this type of interest can be subject to limitations based on the taxpayer's overall investment income and specific tax laws.

In contrast, other types of interest, such as deductible interest, has broader applications (including personal loans or mortgages on primary residences), while personal interest is typically non-deductible unless it meets specific criteria. Mortgage interest, on the other hand, is a specific form of deductible interest related to loans secured by real property, but it is not limited to investment properties. Overall, investment interest specifically captures the scenario of borrowing for property meant for generating income, making it the most accurate choice in this context.