Brokerage Margin
Brokerage margin is debt owed to your brokerage when transactions exceed available brokerage cash.
Margin is available only when Allow margin is turned on for the Brokerage account in Accounts.
Cash state and margin state
The brokerage can be in one of two states:
| State | Meaning |
|---|---|
| Cash state | The brokerage has no margin debt. It may hold borrowed cash, personal cash, or both. |
| Margin state | The brokerage has margin debt. Incoming cash normally repays margin before becoming brokerage cash. |
The app keeps cash and margin debt separate. The brokerage is not treated as holding positive cash and margin debt at the same time.
What creates margin debt
Margin debt can be created when margin is enabled and an event exceeds available brokerage cash.
| Event | Margin treatment |
|---|---|
| Investment Purchase | The shortfall becomes investment-purpose margin debt. |
| Brokerage Cash Withdrawal | The shortfall becomes non-deductible margin debt. |
| Brokerage Transfer to Credit | The shortfall refinances credit debt into margin debt. |
How margin debt is tracked
Margin debt is tracked by purpose because that determines whether margin interest is deductible.
| Margin portion | Description |
|---|---|
| Investment-purpose margin debt | Margin borrowed to buy securities. Interest on this portion is deductible. |
| Capitalized deductible margin interest | Deductible margin interest added to margin debt. |
| Non-deductible margin debt | Margin debt from personal withdrawals or other non-investment uses. |
How incoming cash behaves
When the brokerage is in margin state, incoming cash repays margin before accumulating as brokerage cash. This applies to deposits, sale proceeds, and distributions.
The app applies incoming cash based on the current margin composition and records the effect in the event explanation.
Learn more
- Margin Interest Charge — recording broker margin interest
- Investment Purchase — purchases that create investment-purpose margin debt
- Investment Sale — sale proceeds when margin exists
- Brokerage Cash Withdrawal — withdrawals that create non-deductible margin debt