Mr. and Mrs. Kim own a principal residence and a vacation home. Each residence is subject to a mortgage that qualifies as acquisition debt, and both mortgages were incurred before December 15, 2017. This year, the mortgage holders provided the following information.

Compute Mr. and Mrs. Kim€™s qualified residence interest.

Assume the taxable year is 2018.

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Mortgage Interest Paid Average Balance of Mortgage Principal residence $38,000 $941,800 Vacation home 340,000 22,100