1 On January 2, 2018, he borrowed $80,000 from Wells Fargo on a "home equity loan" - a loan where the bank placed a second mortgage on Steve's home for security on the $80,000 loan.

2.Steve's $80,000 loan is a three-year balloon note with interest due and payable at the end of each calendar quarter.All principal will be due and payable on December 31, 2020.Wells Fargo is charging Steve an annual interest rate of 6.75% on the loan.

3.Steve took the $80,000 of home mortgage proceeds and purchased a boat - he got a steal on the boat since it was January and the seller was desperate to dispose of his boat. `

Steve wants to know if the interest he has paid on the loan during 2018 (a total of $5,400) is fully deductible.