Qualifying Investment

Search Dictionary

Definition of 'Qualifying Investment'

A qualifying investment is an investment that meets certain requirements set by the Internal Revenue Service (IRS). These requirements vary depending on the type of investment and the tax benefits that are being claimed.

For example, to qualify for the Saver's Credit, an investment must be made in a qualified retirement plan, such as a 401(k) plan or an IRA. To qualify for the home mortgage interest deduction, an investment must be made in a home that is used as the taxpayer's primary residence.

The IRS has a detailed list of all of the qualifying investments that are eligible for each type of tax benefit. It is important to read through this list carefully to make sure that your investment qualifies before you claim any tax benefits.

Here are some of the most common types of qualifying investments:

* Retirement plans, such as 401(k) plans and IRAs
* Home mortgages
* Education savings accounts
* Charitable contributions
* Business investments

It is important to note that not all investments qualify for all tax benefits. For example, a retirement plan may qualify for the Saver's Credit, but it may not qualify for the home mortgage interest deduction.

It is also important to note that the requirements for qualifying investments can change from time to time. For example, the Saver's Credit was recently expanded to include Roth IRA contributions.

If you are unsure whether an investment qualifies for a particular tax benefit, you should consult with a tax advisor.

Do you have a trading or investing definition for our dictionary? Click the Create Definition link to add your own definition. You will earn 150 bonus reputation points for each definition that is accepted.

Is this definition wrong? Let us know by posting to the forum and we will correct it.