N-158: Investment Interest Expense Deduction (2024)
Hawaii · Hawaii DoTax · Used for tax years 2024
Hawaii Form N-158 figures your investment interest expense deduction for 2024 and any disallowed expense you can carry forward to future years. It reports investment interest expense and net investment income, which limits the deduction.
Who files this form
Individuals, estates, and trusts must file Form N-158 to claim a deduction for investment interest expense for 2024.
You do not have to file Form N-158 if all three conditions apply:
- Your investment income from interest and ordinary dividends is more than your investment interest expense.
- You have no other deductible investment expenses.
- You have no carryover of disallowed investment interest expense from 2023.
What you'll need
Have the following information and applicable forms ready:
- Your name as shown on your return and your Social Security number or employer identification number.
- Investment interest expense paid or accrued in 2024.
- Your 2023 Form N-158, line 7, if you have disallowed interest expense to carry forward.
- Investment income, investment expenses, and gains and losses from investment property, including mutual fund capital gain distributions and capital loss carryovers.
- Schedules K-1 from partnerships or S corporations reporting investment interest expense, income, or expenses.
- The applicable itemized deductions worksheet from the Form N-11 or N-15 instructions, if you have investment expenses included as miscellaneous itemized deductions.
If deductible investment interest is attributable to an activity for which you are not at risk, you must also use federal Form 6198 to figure the deductible amount.
How to file
Attach Form N-158 to Form N-11, N-15, or N-40.
Complete the three parts to figure total investment interest expense, net investment income, and the deduction. On line 8, enter the smaller of line 3 or line 6.
Individuals generally report the line 8 deduction on the applicable itemized deductions worksheet:
- Form N-11: line 13.
- Form N-15, nonresidents: line 14.
- Form N-15, part-year residents: line 22.
Estates and trusts generally report it on Form N-40, line 10. Special reporting rules apply to interest attributable to royalties, a nonpassive trade or business, or an activity subject to federal Form 6198.
Common mistakes
- Putting investment sale gains on line 4a. The form cautions that net gain from disposing of investment property belongs on line 4b instead.
- Overlooking the tax effect of the line 4e election. Net capital gain you elect to include in investment income is not eligible for the 7.25% maximum capital gains tax rate. Consider that tax effect before making the election.
Questions people ask
What does Form N-158 calculate?
It calculates the investment interest expense you can deduct for 2024 and the amount you can carry forward. Your deduction is limited to your net investment income.
What happens to interest expense I cannot deduct for 2024?
Line 7 calculates disallowed investment interest expense to carry forward to 2025. Subtract line 6 from line 3. If the result is zero or less, enter zero.
Can I include home mortgage interest?
No. Home mortgage interest is not investment interest expense for this form.
Can I count net capital gain as investment income?
Generally, net capital gain from investment property is excluded. You may elect to include part or all of it by entering the elected amount on line 4e. That amount will not qualify for the 7.25% maximum capital gains tax rate.