Can the investment interest expense deduction save you tax on your 2018 return? It’s for interest on debt used to buy assets held for investment, and you must pass some hurdles to benefit. First, you must itemize, which may no longer benefit you because of the higher standard deduction. Second, interest incurred to produce tax-exempt income, such as from municipal bonds, isn’t deductible. Finally, the deduction is generally limited to your taxable interest income, nonqualified dividends and net short-term capital gains for the year. Contact us for more details.