An easy way to maximize deductible interest is to use spare cash to pay off your existing personal debt and borrow the equivalent amount to invest in income-producing assets. Another tax deduction strategy you can employ is debt swapping, which works as follows: Sell a portion of your investments Use the proceeds to pay down your non-deductible interest Take out a loan to repurchase your assets. While you end up with the same level of debt, the interest will now be tax-deductible since you used the funds to purchase income-producing investments.